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Does Self Give You Your Money Back? The Definitive Guide

Yes, Self does give you your money back after you’ve successfully made all your payments on your Credit Builder Loan. This is, however, a bit more nuanced than a simple refund. Think of it more like a forced savings program that builds credit along the way. You don’t get your money back until after you’ve fulfilled your commitment. Let’s dive into the details and unpack exactly how this works.

Understanding the Self Credit Builder Loan

The key to understanding whether Self gives you your money back lies in understanding the mechanics of their Credit Builder Loan. It’s not a typical loan where you receive funds upfront. Instead, you’re essentially paying yourself back before you receive the funds. Here’s a breakdown:

The Process: You choose a loan amount and repayment term that fits your budget. Self then holds the loan amount in a secured certificate of deposit (CD) account.
Regular Payments: You make fixed monthly payments over the loan term.
Credit Building: Self reports your payment history to the three major credit bureaus (Experian, Equifax, and TransUnion), helping you build your credit history with each on-time payment.
Completion & Return of Funds: Once you’ve made all your payments, Self releases the funds held in the CD account to you, minus interest and fees.

Essentially, you’re building credit while saving money. It’s a clever way to kill two birds with one stone, especially for those with thin credit files or those looking to rebuild their credit.

It’s Not a Refund, It’s the Principal of Your Loan

It’s crucial to understand that what you receive at the end isn’t a “refund.” It’s the principal of the loan that you’ve been paying down over time. You are getting the money you put in. Keep in mind that you will not receive the interest and fees that you paid during the loan term, as those cover the cost of administering the loan and the services Self provides.

Think of it like this: you are paying yourself back over time, but you’re paying a premium (the interest and fees) for the convenience of building credit. This is a crucial distinction to make.

Who Benefits Most from Self?

The Self Credit Builder Loan is particularly beneficial for:

Individuals with no credit history: This helps establish a credit footprint.
Individuals with poor credit or a limited credit history: Consistent, on-time payments can help improve your credit score.
Individuals who struggle to save: The forced savings aspect can be a helpful tool.
Individuals looking for an alternative to secured credit cards: It offers a different path to credit building.

Weighing the Pros and Cons

Before jumping into a Self Credit Builder Loan, consider the advantages and disadvantages.

Pros:

Credit building: Reports to all three major credit bureaus.
Forced savings: Helps you save money while building credit.
Accessible to those with poor credit: Easier to get approved than many other credit products.
No hard credit inquiry (initially): Self performs a soft credit check to determine eligibility, so it won’t negatively impact your credit score at the start.
Educational Resources: Self provides educational content related to financial literacy and credit building.

Cons:

Interest and fees: You’ll pay more than the principal loan amount.
Money is locked up: You can’t access the funds until the loan is paid off.
Doesn’t offer immediate access to funds: Unlike a traditional loan, you don’t get cash upfront.
Credit score impact isn’t guaranteed: Late or missed payments will negatively impact your credit score.
Alternatives Exist: Secured credit cards, credit-builder cards, and becoming an authorized user on someone else’s credit card might be other options to explore.

FAQs: Diving Deeper into Self and Your Money

Here are some frequently asked questions (FAQs) to provide you with a more comprehensive understanding of the Self Credit Builder Loan and how it works regarding your money.

FAQ 1: What happens if I can’t make a payment on my Self Credit Builder Loan?

Self typically offers a grace period for late payments. However, consistently late payments will be reported to the credit bureaus, negatively impacting your credit score. If you anticipate difficulty making a payment, contact Self immediately to discuss your options. They may be able to work out a modified payment plan or offer temporary assistance. Persistent failure to pay may ultimately lead to default, which could result in the closure of your loan and potential collection activities.

FAQ 2: Can I access my funds early if I need them?

No, generally, you cannot access your funds early with a Self Credit Builder Loan. The purpose of the loan is to build credit through consistent payments, and allowing early access would defeat that purpose. The funds are held in a secure CD account until the loan is fully paid off. In rare circumstances, Self may consider hardship requests, but this is not guaranteed and typically involves significant penalties and account closure.

FAQ 3: What fees are associated with a Self Credit Builder Loan?

Besides the interest you pay on the loan, Self may charge an Administrative Fee. This fee is typically deducted from the initial loan amount or included in your monthly payments. The amount of these fees varies depending on the loan amount and term you choose. Always review the loan agreement carefully to understand all associated fees before committing.

FAQ 4: Does Self perform a hard credit check?

Initially, Self performs a soft credit check to determine your eligibility. This doesn’t impact your credit score. However, if you apply for a Self Visa® Credit Card (a separate product offered after building credit with the Credit Builder Loan), a hard credit inquiry will be performed, which could slightly lower your credit score.

FAQ 5: How quickly will Self help me build credit?

The time it takes to see a significant improvement in your credit score depends on several factors, including your existing credit history, your payment behavior, and the information reported to the credit bureaus. Consistent, on-time payments are crucial for improving your credit score. You might start seeing some improvement within a few months, but a more substantial impact usually takes several months to a year of responsible credit management.

FAQ 6: What credit scores does Self report to?

Self reports to all three major credit bureaus: Experian, Equifax, and TransUnion. This ensures that your payment history is reflected in your credit reports, regardless of which bureau a lender pulls your credit from.

FAQ 7: Can I have more than one Self Credit Builder Loan at a time?

No, you can only have one Self Credit Builder Loan at a time. This is because each loan requires the creation of a unique CD account. Once you’ve paid off your loan, you can then start a new one if you choose.

FAQ 8: What happens if I move before my loan is paid off?

Moving doesn’t affect your Self Credit Builder Loan. Your payments and loan terms remain the same regardless of your location. Just make sure your contact information is updated with Self, so you continue to receive important notifications.

FAQ 9: Does the Self Credit Builder Loan guarantee an improved credit score?

While the Self Credit Builder Loan is designed to help you build credit, it doesn’t guarantee an improved credit score. Your credit score is affected by several factors, including your payment history, credit utilization, length of credit history, credit mix, and new credit. Consistent, on-time payments are essential, but you also need to manage your other credit accounts responsibly.

FAQ 10: What happens to the interest I pay on the Self Credit Builder Loan?

The interest you pay on the Self Credit Builder Loan, along with any fees, does not get returned to you. This interest is used by Self to cover the costs associated with administering the loan, reporting to the credit bureaus, and providing its services. Consider it a fee for the service of building your credit.

FAQ 11: Can I refinance my Self Credit Builder Loan?

No, you cannot refinance your Self Credit Builder Loan. The loan structure doesn’t allow for refinancing. The loan remains fixed until it is paid off.

FAQ 12: Is the Self Credit Builder Loan FDIC insured?

Yes, the funds held in the certificate of deposit (CD) account are FDIC insured up to the standard maximum deposit insurance amount. This provides protection for your funds in the unlikely event that Self experiences financial difficulties. It’s always wise to confirm this directly with Self, as terms and conditions can change.