 TITLE: Everything You Need to Know About Credit-Builder Loans CONTENT: How Do Credit-Builder Loans Work?\n---------------------------------\nAccording to the Consumer Financial Protection Bureau, credit-builder loans generally come in increments of $300 to $1,000. You'll make payments toward these loans over six to 24 months, and you won't have access to the money you've paid until that time frame is over. But the lender reports your timely payments to the three major credit bureaus (Experian, TransUnion and Equifax), and once your loan term is up, you'll have savings you didn't before, making a credit-builder loan doubly useful.\nWhen choosing a loan amount, consider a small one with easily affordable monthly payments, especially if you're on a tight budget. Repaying the loan on time is the most important factor for your credit scores, not its size.\nYou'll pay interest on the loan, but the lender may return a portion of that interest—sometimes referred to as \"dividends\" by the lender—to you at the end of the loan term. When choosing a credit-builder loan, make sure you understand its interest rate, any fees you'll pay, and the lender's policy on whether you'll receive the interest that has accrued.\nYou may not need to undergo a traditional credit check to apply for a credit-builder loan. Instead of using your credit score as a baseline for approval, some lenders may use your banking history through the consumer reporting agency ChexSystems. In this case, activities like bounced checks could affect whether you're approved for a loan.\nTo get most credit-builder loans, you'll need to provide some or all of the following:\n*   Employment information\n*   Pretax monthly income (lenders may allow you to keep any alimony or child support you receive out of this total)\n*   Pay stubs as proof of income\n*   If self-employed, tax returns as proof of income\n*   Total housing payment\n*   Other loan balances\n*   Checking and savings account balances\n*   References END