Is Credit Strong a Loan? How the Account Works

Credit Strong provides a pathway for individuals and businesses to establish or enhance their credit profiles. It addresses the common challenge of building credit, particularly for those with limited or no prior credit history. The service operates on a model designed to foster responsible financial habits, which are then reflected in credit reports. This structured approach to credit building differentiates it from traditional lending products.

The Structure of a Credit Strong Account

Credit Strong primarily offers a “credit-builder loan” or “credit-builder account.” This differs significantly from a conventional loan where funds are provided upfront for immediate use. Instead, the loan amount is placed into a locked, FDIC-insured savings account held in the user’s name, rather than being disbursed directly. This setup secures the principal portion of the loan.

Users then make regular monthly payments over a predetermined term, similar to a traditional loan repayment schedule. Each payment contributes to paying down the loan and simultaneously builds the savings held in the locked account. The user does not access these accumulated funds until the full loan term is completed and all payments have been made. Upon successful completion, the savings, minus any interest and fees, are released to the user.

Credit Strong offers various plans, including “Instal” for entry-level credit building and “CS Max” for larger credit amounts. Loan terms range from 24 to 60 months, with amounts between $1,000 and $10,000. Interest rates on these installment accounts range from 5.99% to 15.88% Annual Percentage Rate (APR). A one-time administrative fee, between $15 and $25, is charged at the beginning of the account.

Credit Strong also offers “Revolv” accounts, which function as secured revolving lines of credit designed to help lower credit utilization and build credit while saving. These involve an annual fee, with optional monthly payments that contribute to savings. For businesses, Credit Strong provides options that can have a 0% interest rate, focusing on building business credit history through payments into a locked savings account.

How Credit Strong Influences Credit Scores

Credit Strong aims to positively impact a user’s credit score by reporting payment activity to major credit bureaus. Credit Strong reports to all three primary credit bureaus: Experian, Equifax, and TransUnion. This consistent reporting of on-time payments is a significant factor in building a positive credit history.

Payment history accounts for approximately 35% of a FICO score, a widely used credit scoring model. Making timely payments on a Credit Strong account directly contributes to this crucial component of a credit score. The addition of an installment loan or a revolving line of credit to a credit profile can also improve credit mix, another factor influencing credit scores. A diverse credit portfolio, including both installment and revolving accounts, can be viewed favorably by lenders.

While a new account might initially cause a small, temporary dip in a credit score due to an increased “amounts owed” metric, consistent on-time payments help mitigate this. As the loan balance decreases with each payment, the positive impact on the credit profile grows. The length of credit history also plays a role, with longer account terms offering greater benefits as payment history matures.

Credit Strong does not perform a hard inquiry when an account is opened, so applying will not negatively impact a credit report. Users begin to see their Credit Strong account appear on their credit report within 30 to 60 days after making their first payment.

Account Management and Financial Aspects

Once a Credit Strong account is established, payments are made through automatic withdrawals from a linked bank account. This helps ensure payments are made on time, which is essential for credit building. Users can manage their AutoPay settings through an online customer portal.

Beyond the interest rate, certain fees may apply. A late payment fee, 4% of the minimum monthly payment, is charged if a payment is 15 days or more past due. While there is a 14-day grace period, payments more than 30 days late are reported to credit bureaus and can negatively affect a credit score. Credit Strong does not charge prepayment penalties, allowing users to pay off their loan early without additional fees.

At the conclusion of the loan term, or if the account is closed early, the accumulated savings in the locked account are released to the user. This amount represents the principal portion of the payments made, minus any interest and fees. If a user is unable to continue making payments, Credit Strong allows accounts to be closed early, with the locked funds used to pay off the remaining balance. Any remaining savings are then returned to the user, and the loan is reported as paid and closed.

Steps to Opening a Credit Strong Account

Opening a Credit Strong account involves a straightforward online application process. Prospective users begin by visiting the Credit Strong website or online portal. The application takes a few minutes to complete.

During the application, users are required to provide personal identification information, such as name, address, and either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). A valid bank account or debit card details are also necessary for setting up payments. Credit Strong does not require a credit score for eligibility.

After submitting the application, Credit Strong reviews the information to determine eligibility. Upon approval, users select a plan that aligns with their financial goals and budget. The first monthly payment is due one month after the account is opened.