Financial Health Solutions: Credit Builder Loans and Rent Reporting

Approximately 1 in 5 Americans have a subprime credit score,^{1, 2} limiting their credit options and increasing interest costs. In 2023, households with subprime credit spent 13% of their income – an estimated $146 billion – on fees and interest for products like credit cards and auto loans.³ This burden disproportionately affects Black and Latine households: Only 39% of Black and 21% of Latine households have a subprime credit score, compared with 14% of white households.⁴

Credit-building tools aim to improve credit scores by reporting consistent payments to credit bureaus. Solutions like credit-building loans and reporting rent and bill reporting to credit bureaus can help consumers build credit by demonstrating that they are making regular payments.

To explore the impact of these tools, the Financial Health Network’s Impact Lab partnered with Self, a financial technology company focused on helping people build credit, to analyze users’ credit outcomes from two tools: Self’s rent and bills reporting (R&B) solution and its Credit Builder Account (CBA).

R&B users with subprime credit saw the most pronounced improvements in their credit scores.
Final credit tier for R&B users, by starting credit tier.

To learn more about credit builder loans (CBA) and rent and bill reporting (R&B), we looked at two separate groups of people who either started a CBA or subscribed to R&B reporting in roughly the same time period (April – October 2023). These users could be using these products for the first time or could be returning users. We observed both groups for up to 12 months, until April 2024.

This research was conducted through the FinHealth Impact Lab, which supports a select group of companies developing and testing innovations to improve financial health. The Financial Health Impact Lab is made possible through the generous support of MetLife Foundation, a founding supporter of our financial health work. Learn about the program here.

We are thankful for the contributions of Marisa Walster, Riya Patel, Fawziah Bajwa, Dan Miller, Michael Salmassian, and Chris Vo.