If you are one of the millions of Americans with less than great credit, you probably have been denied for a loan or credit card, paid higher interest rates if you received credit, or had trouble renting an apartment or home because of your low credit score.
Affordable options to establish or rebuild credit history have been limited in the past. The most common option has been to apply for a secured credit card. Unfortunately, many consumers don’t qualify for credit cards, or if you are lucky enough to get approved, you still have to come up with several hundred dollars for the upfront security deposit along with often paying high fees and interest rates.
A recent survey by the Federal Reserve found that over 40% of Americans don’t have enough cash in savings to cover a $400 unexpected expense, so coming up with the money for an upfront security deposit can be difficult for many Americans, trapping them in a vicious cycle of high cost credit.
Austin Capital Bank, a 5-star rated independent community bank in located in Austin, Texas, offers a great new alternative to credit cards with the launch of Credit Strong. Credit Strong is the first fusion of credit building and an FDIC insured savings account available 100% online nationwide.
While consumers have typically built credit by getting a loan or credit card and spending on purchases, with a Credit Strong account, they can build credit by setting aside savings.
Here’s how a Credit Strong account works
When a customer opens up a Credit Strong account, Austin Capital bank instantly gives them a loan, but they don’t instantly receive the loan funds. The loan funds are deposited into an FDIC insured savings account held in the customer’s name that secures the loan.
The customer makes a single monthly payment of principal and interest on the loan. The principal portion of the payment is credited to the lock on their savings account that secures the loan and acts as a planned savings program, building their savings monthly. Credit Strong reports their loan payments to the 3 major credit bureaus, building the customer’s credit history. When the loan is paid-in-full, the lock is removed on the savings account and the funds become available to the customer. The customer ends up with money in their savings account and payment history for an installment loan on their credit report.
Customers also gain access to their Credit Strong dashboard where they can view their FICO Score ® for free and track their progress each month. 90% of lenders use FICO Score when making lending decisions and payment history accounts for 35% of you FICO Score. A Credit Strong account can help demonstrate a positive pattern of re-payment that mortgage and auto lenders look for.
What are the perks of a Credit Strong account?
- Build credit history with all 3 major credit bureaus
- No upfront security deposit
- No credit score required
- No hard credit inquiry
- May cancel account at any time with no penalty
- Adds an installment tradeline to your credit profile
- Work directly with a 5-star rated bank to build credit each month
- Access your FICO 8 Score in your free credit dashboard 24/7
- Once your loan matures, continue your savings pattern with continued deposits to your savings account
Who’s eligible for a Credit Strong account?
Your credit score is not an underwriting factor when you apply for Credit Strong. You can have poor credit or no credit score (no credit history) and be approved.
The following requirements are needed to open a Credit Strong account:
- You must be at least 18 years old and a permanent U.S. resident with a physical U.S. residence (address)
- A valid social security number (SSN) or individual taxpayer identification number (ITIN)
- A checking account, debit card, or prepaid card in good standing
- A mobile phone number or Google Voice account
- An email address
Credit Strong is a division of Austin Capital Bank, a 5-star rated, independent FDIC-insured community bank located in Austin, Texas. Credit Strong accounts can be opened online from any mobile device or computer. Accounts are available nationwide in 47 states (excluding North Carolina, Vermont, and Wisconsin).
You can find out more about Credit Strong by visiting their website at www.CreditStrong.com or watch this brief video on how you can build credit and savings.
Editorial Disclaimer: Information in these articles is brought to you by CreditSoup. Banks, issuers, and credit card companies mentioned in the articles do not endorse or guarantee, and are not responsible for, the contents of the articles. The information is accurate to the best of our knowledge when posted; however, all credit card information is presented without warranty. Please check the issuer’s website for the most current information.