 TITLE: Credit-Builder Loans vs. Secured Credit Cards: Which Is Best? CONTENT: What Is a Credit-Builder Loan?\n------------------------------\nA credit-builder loan is a loan product that can help you build credit and save money. It doesn't quite work like a traditional loan, though.\nInstead of receiving funds if you're approved, the lender puts the loan amount into a savings account. You'll make payments to the lender for six to 24 months, depending on the loan term. Once the loan term is up, the full amount of the loan is disbursed to you. (Some lenders also return the interest that accrued while you were repaying the loan.)\nEach payment you make is reported to the three major credit bureaus (Experian, TransUnion and Equifax) to help build your credit. Making every payment on time can help you prove yourself as a responsible borrower and increase your credit scores.\nCredit-builder loans are offered by credit unions, community banks, online lenders and lending circles. They are usually available in increments of $300 to $1,000.\nWhen you apply, most lenders will ask you to provide the following:\n*   Employment information\n*   Income (pay stubs if you're employed or tax returns if you're self-employed)\n*   Monthly housing payments\n*   Outstanding balances on existing loans\n*   Checking and savings account balances\n*   Personal references\nSome lenders do not require a credit check when applying for a credit-builder loan. Still, they may review your banking history through ChexSystems. So, you could get approved if you have less-than-perfect credit but exceptional banking history. END