As the name suggests, a credit builder loan can help you build credit and improve your financial standing. Digital Federal Credit Union (known as DCU) offers one such loan to help consumers improve their credit.
Business Insider's personal finance team compared DCU to the best credit builder loans and found it to be an industry leader with a low interest rate, nationwide availability, and no credit check requirement.
However, DCU imposes several eligibility requirements that may complicate the enrollment process. Read on to see whether DCU's credit builder loan is a good fit for you.
DCU Credit Builder Loan Pros and Cons
DCU Credit Builder Loan Pros
- Reports to three credit bureaus: DCU reports your payments to all three major credit bureaus (Equifax, Experian, and TransUnion), so you can improve your credit score across the board.
- Low costs: The fixed 5.00% APR on DCU's credit builder loan is exceptionally low. That interest rate, combined with no origination fee or other fees (except for late payments), makes this an affordable option for building credit.
- Flexible loan options: You can choose loan terms between 12 and 24 months, and loan amounts of $500 to $3,000. That flexibility gives you control over how much you pay each month and how long you make payments.
DCU Credit Builder Loan Cons
- Membership requirements: DCU credit builder loans are only available to DCU members. DCU's eligibility requirements aren't overly stringent — if you don't qualify otherwise, you can join with membership in an affiliated nonprofit organization — but they create an extra hoop to jump through for enrollment.
- Low yield on locked funds: The "member described savings" account where your loan funds are kept earns interest at only 0.15% APY. That's below the average savings account interest rate.
- Late fee: If your payment is more than 15 days late, DCU charges a late fee of 4% of the payment amount, with a minimum fee of $5.
Open an Account
5.00%
N/A
$500 to $3,000
- Low APR
- Flexible payment terms
- No hard credit check
- DCU membership required
DCU's credit builder loan doesn't require a credit check, and applying won't result in a hard inquiry on your credit report. While DCU is available in all 50 states, you'll need to become a DCU member to apply. Membership has its own set of eligibility requirements.
- The information related to Digital Credit Union Credit Builder Loan has been collected by Business Insider and has not been reviewed by the issuer.
- Offers flexible terms between 12-24 months
- Fixed loan rate at 5.00% APR
- Helps earns dividends in your DCU savings account
Compare DCU to Credit Builders
$0-$6.95 monthly + optional $49.95 fee for retroactive reporting
- Rent reporting is free of charge
- Credit score monitoring
- $1M identity theft insurance
- Three-bureau rent reporting
- Utility and cell phone payments
- Doesn’t require landlord’s approval
- Poor customer service experience
- Cell phone and utility payments only reported to TransUnion
Self Rent Reporting reports your rent and other bills to the credit bureaus. This improves your payment history and as a result, your credit score, without needing to take on debt. One of the companies listed in our guide on the best rent reporting services, Self Rent Reporting stands out for offering several credit building perks under one competitive price.
Self Rent Reporting- Reports to all three credit bureaus
- Connects directly to your bank account
- Reports your rent, cell phone, electric, water and gas payments
- $49.95 optional fee for 24 months of retroactive rent and utilities reporting
- $6.95 per month
- Add two years of past payments
- Results vary. You may not receive an improved credit score. Not all lenders use scores impacted by rent/utility payments.
no monthly service fee
up to 4.00% bonus
$0
- 3 Savings Pods that let you earn up to 4.00% bonus
- No minimum opening deposit
- No monthly service fees
- No overdraft fees
- No instant transfer fees to other Current members
- Early direct deposit
- Debit card included
- Budgeting tools: Round-ups and Spending Insights
- Earn cash back on debit card purchases
- $2.50 out-of-network ATM fee
- Can't overdraw from your account without the Overdrive feature
- Access to 40,000 fee-free Allpoint ATMs
- You may overdraw up to $200 from your account with no overdraft fees if you're eligible for Overdrive
- To be eligible for the Overdrive feature, you'll need to receive direct deposits $500 per month
- 3 Savings Pods: You may deposit up to $2,000 in each Savings Pod; Money that is kept in Savings Pods can earn 4.00% bonus
- Round-Ups: Debit card purchases are rounded up to the nearest dollar and the change is deposited into a Savings Pod
- Spending Insights: You can create a budget that keeps track of specific categories of spending; Spending Insights monitors how much you spend and can issue alerts if you are close to your limit
- Cash back: You can earn cash back at 14,000 select stores when you use your debit card; Points be redeemed at the Current Shop for cash
- Issued through Choice Financial Group (Member FDIC)
$0 intro for the first year, then $25
28.24% Variable
No credit and limited credit
- Easy to be approved with bad (or no) credit
- Effective tool for building credit
- Automatically be reviewed for credit limit increases
- No welcome bonus
- No rewards for spending
- $25 annual fee
Getting approved for a credit card can be challenging if you have a negative or non-existent credit history. The Self Visa® Credit Card offers an innovative solution that bypasses the traditional credit card application process, making it easier to get approved while also helping to build or repair your credit. However, getting the card involves several steps, as well as costs you wouldn't incur with other credit cards.
Self Visa® Credit Card- *$0 annual fee for the first year only. $25 annual fee after. 28.24% Variable APR. Limited time offer.
- To be eligible for the Self Secured Visa you first have to have an open Credit Builder Account, make three monthly payments on time, have at least $100 in savings progress and have your account be in good standing
- There are no hard credit checks
- Minimum credit limit is $100
- Minimum security deposit is $100
- Credit limit increased as you make monthly payments towards your Credit Builder Account
DCU Credit Builder Loan Overview
Chartered in 1979, DCU manages over $9.9 billion in assets, making it the largest credit union in New England in that respect. Based in Marlborough, Massachusetts, DCU operates 23 full service branches in Massachusetts and New Hampshire, and boasts over 1 million members nationwide.
DCU's credit builder loan is available in all 50 states. DCU doesn't require a credit check, so applying won't result in a hard inquiry on your credit report. However, you'll need to become a DCU member to apply, and membership has its own set of eligibility requirements.
How the DCU Credit Builder Loan Works
To apply for DCU's credit builder loan, you'll need to first join DCU. Membership is available to those who meet certain eligibility requirements, such as living in a participating community, having a familial relationship with a current DCU member, or working for a company on DCU's list of participating employers. If none of those apply, you can gain eligibility by joining one of several nonprofit organizations (memberships cost as little as $10). Membership makes you eligible for other DCU services beyond the credit builder loan. As a bonus, your family will also be eligible for membership.
Once your DCU membership is confirmed, you can apply for a credit builder loan online or by calling the loan origination team at 800-328-8797 (ext. 7614). You won't need to complete a credit check, but you'll need to provide identity and other information, including your Social Security number, mortgage or rent amount, income, and employment status. If your application is approved, the loan amount is deposited into a DCU savings account, where it's held until the loan is paid off.
Key Features of the DCU Credit Builder Loan
As you make payments on your loan, DCU reports the status of the loan to the three major credit bureaus. Each on-time payment adds a positive data point to your payment history, which is the most important component of your credit score. While that should improve your credit score, DCU makes no guarantees about the impact of your credit builder loan.
Once the loan is fully paid off, you'll be able to access the funds in your DCU savings account immediately. You can make payments for the full loan term or pay off the loan early with no penalty, though paying the loan off early will limit the effect it has on your credit score.
You can take advantage of no payments for the first 60 days after the closing of the loan. In that case, your first payment will apply first to interest that accrues from the date the loan is funded, and then to the principal due. The funds are FDIC-insured, and your DCU savings account earns dividends at the published dividend rate. There's no origination fee associated with DCU's credit builder loan, but you will be subject to a late fee of 4% of the payment due (with a $5 minimum) when payment is more than 15 days late.
DCU Credit Builder Loan Costs and Fees
DCU offers credit builder loans from $500 to $3,000, with loan terms between 12 and 24 months. The interest rate is a fixed 5.00% APR. That rate is far below the average interest rate for personal loans, though DCU notes it is subject to change at any time.
DCU Credit Builder Reviews and Ratings
DCU has received mixed reviews from customers online. The company has an average Trustpilot rating of 1.8 stars out of 5 across 68 reviews, and its Better Business Bureau profile has a rating of just 1.18 stars out of 5, with over 200 complaints filed in the past three years and 77 complaints closed in the last 12 months. Many of these reviews cited poor customer support over the phone. However, these ratings are based on limited reviews and concern DCU entirely, not just its credit builder loan.
DCU's mobile app has received an average of 4.6 stars across 6,045 reviews on its Google Play store. DCU's iOS app has an average of 4.9 stars across over 90,000 reviews on its Apple app store page.
Common issues cited among all negative reviews of DCU include poor customer service and trouble with the website and mobile app.
Compare Credit Builder Accounts
DCU Credit Builder Loan Alternatives
The DCU credit builder loan offers some of the most flexible terms and the lowest interest rate, even among the best credit builder loans. Let's see how DCU compares to its competition.
DCU vs MoneyLion
MoneyLion is another one of the best credit builder accounts. It is similar to DCU in that both include an array of online banking services. MoneyLion members get access to benefits like a $500 cash advance and investment accounts. However, MoneyLion services come with a $19.99 monthly membership fee while DCU memberships don't have monthly costs.
MoneyLion's credit builder loan is also less flexible than DCU's. MoneyLion's credit builder loan maxes out at $1,000 with a 12-month loan term compared to DCU's $3,000 limit with up to 24 months. MoneyLion's APRs are also higher, ranging from 5.99% to 29.99%. DCU's interest rate is a fixed 5.00% APR.
Read our MoneyLion credit builder loan review.
DCU vs. Self
Self is one of the most widely available credit builder loans on the market, available in all 50 states. While DCU's credit builder theoretically has the same availability, you have to jump through several hoops to gain access to the loan.
The two companies offer comparable flexibility. Self has four plans with total loan amounts ranging from $600 to $3,600, all with a 24-month loan term while DCU credit builders range between $500 and $3,000 across loan terms up to 24 months. That said, DCU loans are much cheaper, with a 5.00% APR compared to Self's interest rates, which range from 15.51% to 15.92%.
That said, Self also offers a Self Visa® Credit Card after you've made three on-time payments. The card uses the amount you've paid off as collateral for the secured credit card.
Read our Self credit builder loan review.
DCU vs. Fizz Credit Builder Debit Card
While DCU offers the best interest rates compared to other credit builder loans, there are other products that help you build credit. For example, Fizz offers a debit card that reports transactions to the credit bureau. Geared toward college students, the card comes with no interest payments, making it cheaper to use than DCU. You can also earn points when you pay with the Fizz card at businesses often found around college campuses.
Read our Fizz credit builder debit card review.
Why You Should Trust Us: How We Reviewed DCU Credit Builder Loan
The most important factors in our rating are trustworthiness, the fee structure and affordability of the product, and features provided — specifically prioritizing the number of bureaus reported to.
We looked closely at DCU Credit Builder's reviews and what the customer experienced when working with the company. We also checked that it reports to all three major credit bureaus, its fee structure, and availability. We scored the product on the following factors:
- Trustworthiness
- Fee Structure and Affordability
- Features
- Flexibility
- Availability
Read the full methodology for how we rate credit products.
Frequently Asked Questions About DCU Credit Builder Loan
Does DCU work with bad credit?
Yes, DCU can work with bad credit. You won't have to complete a credit check to apply for DCU's credit builder loan. So long as you meet the other eligibility requirements, you can be approved even with bad credit.
How much does DCU's credit builder lend?
DCU offers credit builder loans in amounts between $500 and $3,000.
Does DCU help build credit?
DCU's credit builder loan can add positive data points to your credit history when you make on-time payments. However, there's no guarantee that your credit score will go up as a result.