Your credit is a very important aspect of your personal finances that can dictate whether or not you have access to certain credit cards and loans. If you have a bad credit score, you will find you get rejected from many loans and credit card applications or only have access to debt that charges high interest rates. Secured credit cards like the ones with Self allow you to get a credit card, even if you have bad credit, so you can begin to build your credit history and credit score over time.
Self Financial is an online lender that is based out of Austin, Texas. Founded in 2014, Self is a relatively new personal finance company that has partnered with a Missouri bank to provide services to their customers.
One of Self’s main products is the “credit builder accounts.” To have access to one of these accounts, you do not need to have a perfect credit score. In fact, Self knows that many customers that want to use this service likely have low credit scores, so they allow people with poor credit scores to open accounts.
Once you have a Self credit builder account, you can have access to small, personal loans to help you fund some of your purchases if you are short on cash. As you pay off these relatively small loans, you begin to build your payment history. With each successful payment, Self reports this information to the three credit bureaus, Experian, Equifax, and TransUnion. As a result, your credit score eventually goes up. Many personal loan lenders that offer small loans like Self oftentimes do not improve your credit score if you pay them back. Self is truly an innovative app that helps people to build credit through their many products.
In addition to their credit builder account, Self offers a secured credit score that individuals with poor credit scores can have access to. Like the credit builder account, Self’s credit card can be an additional way for customers to increase their credit score over time. Let’s take a deeper look at Self’s credit card.
Self’s credit card is known as a “secured” credit card. Debt like loans and credit cards can either be secured or unsecured debt. If your debt is unsecured, it means that you do not need to put something up for collateral in case you fail to pay back your loan or credit card balance. On the other hand, secured debt is the exact opposite. It is debt that requires you, the borrower, to put something up for collateral to get the credit card or loan. For example, if you get a secured car loan you will likely have to put up the car you are buying as collateral. If you fail to pay back your car loan, the bank or other lender that gave you the car loan has the legal right to take the car into their possession and sell it to gain some value back.
As you might be able to see, secured debt is safer for the lender and more risky for the borrowers, while unsecured debt is riskier for the lender and safer for the borrower. Because of this, lenders are often unwilling to lend unsecured loans and credit cards to people with bad credit scores, but are willing to give secured loans and credit cards to these same individuals. This is why Self’s credit card is a secured credit card.
Self’s credit card is a Visa credit card. With the power of a huge credit card provider like Visa, users of Self’s credit card are able to use their credit card around the world where using Visas are allowed, which is practically every store and restaurant.
The Self Visa card is not like the typical credit card you might see on commercials or other advertisements. While it builds your credit score, this card does not really provide you any of the rewards that you might see other credit cards advertise for.
We’ve gone over the general gist of the Self Visa secured credit card, so let’s now go into greater detail about how the card works and how you can get started with it.
As we mentioned earlier, you will need to open a Self credit builder account before you are able to qualify for the Self credit card. According to Self’s website, to meet the requirements for a Self credit card your credit builder account must show more than $100 in “savings progress”. Next, you must make three monthly payments on time with the account and your account cannot be in the negative or have any outstanding payments that need to be paid.
Once the criteria for the credit builder account are met, you can begin setting up the Self credit card account. First, you set your own credit limit by using the funds in your credit builder account. Your credit limit is essentially the maximum amount of money you can use on your credit card in any given month. Whatever you choose your credit limit to be is the amount your account is “secured”. If you fail to make your payments, Self can reclaim this amount of money to recoup the money they lost.
The minimum amount your credit limit can be is $100. If you hope to increase your credit limit over time, keeping the account in good standing will allow you to do so. Once this is established, you can be approved for the card. Self will then send you the physical credit card in the mail and you can begin using it to make a variety of purchases.
Did you know that your credit is composed of many different factors that together make up your credit score. The most important of these factors is your payment history, which makes up 35% of your total credit score! The best way to improve your score is by improving this payment history. This means consistently making your payments on time and in full and never missing a monthly payment.
As we mentioned earlier, Self reports all of your successful payments to the three credit bureaus, Experian, Equifax and TransUnion. By making complete and timely payments consistently over a period of months or years, your payment history gets built over time. This in turn will cause your credit score to increase after some time.
On the surface, Self makes it seem like your card is essentially free and comes at no cost, as long as you have a credit builder account with Self. However, this is somewhat misleading. To even open the credit builder account you will need to pay a one-time $9 fee. Even if you don’t use their credit builder loan, it will still cost you. The credit card will cost you $25 a year and a steep 23.99% interest rate is charged along with a $15 late payment fee.
We’ve now looked at who Self is, what their credit card is and how it works. Let’s now take a look at the pros and cons of this credit card so you can have all the information you need to decide if this credit card is good for you or not!
Naturally, the reviews from customers that Self posts on their website only speak of the best when it comes to Self’s credit builder account and their credit card. However, this is not unwarranted. Self’s credit card is a good product that has helped plenty of people have access to a credit line while building their credit at the same time.
On more unbiased sites, Self credit card reviews are pretty good, but some negative reviews are sprinkled in there as well. On the positive side, customers like “trganje” write, “The Self Visa Credit card is building my credit fast and it also lets me have a spending limit when I get low on money.” On the other side, customers complain of long wait times for payments to be processed as well as a lack of good customer service.
In all, Self’s Visa secured credit card is a very creative and helpful credit card that allows people with bad credit scores to have access to the money they need, and the debt they need to be able to build credit history. Setting up an account is fairly easy and the qualifications to apply for the card are about as easy as they come. Overall, this card can be a great tool for people to build their payment history and in turn build their credit score up over time.
On the flip side, this card can be slightly more expensive than some other cards that you might find. Likewise, many of these cards do the same thing Self’s card does, and they might even give you rewards that Self can’t provide either. While Self’s card is a great option, it could do you some benefit to look for a cheaper and better card than Self’s Visa secured credit card.