Home Federal Blog
Credit Building

Tips & Tricks | January 14, 2020

How to Build (or Fix) Your Credit Rating

Good credit is vital for opening up many financial opportunities in life.  With a great credit score, you will see lower interest rate on car loans, credit cards, and mortgages.  Some employers and landlords may check credit reports before they make a job offer or approve a rent application.

Building good credit takes time, so people, especially young adults, should begin now.

One very effective way to build your credit is with a special credit builder loan.  Not all financial institutions have these programs so you need to find the right one.

There are a few community banks that are known for building long term, even lifetime relationships in their own back yards, and may offer credit builder loans.  Home Federal is one of those institutions that provides credit builder loan programs to existing and new clients in Minnesota, Wisconsin, and Iowa area.  

Leslie Schmidt, Home Federal Mortgage Lender, has extensive in helping potential homeowners build their credit and utilizes Home Federal's Credit Builder Loan Program to improve credit scores.  "This loan is a favorite among Home Federal team members who often start their own children on a credit builder loan when they are still young.  I've already done this for my own children."

What Will a Credit Builder Loan Do For You? 

Leslie says, "If you have poor credit (don't be ashamed, this is not uncommon, especially with young people) or if you have little to no credit history, this program helps you build or fix your credit in six months to a year.  Home Federal's Credit Builder Loan also has another BIG benefit: At the end of one year, you may have enough for a down payment on a home if you qualify for one of our first time home buyer programs." 

How Does a Credit Builder Loan Work? 

The amount you borrow is held in a bank account while you make payments.  The financial institution controls the account as you build credit over the course of a year.  "Yes, we control this while you are going through the program so you don't get into trouble."  Leslie adds, "The great news is your payments go into a savings account and at the end of the year, you have built savings!  Your on-time payments are reported to the three major credit bureaus - Equifax, TransUnion, and Experian.  Because credit scores are calculated from the information in your credit reports, those on-time payments are a big factor in improving your credit score and the savings account can become your down payment for your first home."

Can I Get Approved for a Credit Builder Loan? 

The requirements for a credit builder loan are different than typical loans:

  1. Good credit is NOT required for approval.
  2. Collateral is NOT needed; only enough income to make the payments.
  3. You must have an account at Home Federal.  This can typically be opened without delay once the process starts.

Why does Home Federal Offer Credit Builder Loans? 

Leslie says, "We want to see you succeed!  We find value in starting a relationship and keeping it for a lifetime.  Our expertise is helping our clients, in any situation, achieve financial success throughout their lifetime."

If your credit could use some help, make an appointment and talk to one of our bankers.  We provide credit builder loans to existing and new clients in Minnesota, Wisconsin, and Iowa areas.  Our banking and loan experts are happy to help people achieve financial success through all phases of life.

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