Is Self a Credit Card? Understanding How Self’s Products Work for Building Credit

Building or rebuilding your credit can be a challenging process. With poor credit or no credit history, it can be difficult to get approved for many traditional credit cards that could help build your score over time. This leads many people to search for alternative options, which is where Self comes into play. But is Self an actual credit card? Let’s take a closer look at what Self offers and how its products can help you establish and improve your credit.

An Overview of Self’s Offerings

Self is a fintech company, not a bank. It partners with banks to offer the following primary products:

• Credit Builder Account – This is a installment loan that helps you save money while simultaneously building credit history You make fixed monthly payments which go into a CD account

• Self Visa Credit Card – This is a secured credit card, meaning you have to put down a refundable deposit that becomes your credit limit It’s a good starter card for building credit

• Rent Payment Reporting – Self lets renters report monthly rent payments to all three credit bureaus to build credit history.

How the Self Visa Credit Card Works

The Self Visa Card is issued by Lead Bank or First Century Bank and runs on the Visa network. It functions like any other credit card, allowing you to make purchases anywhere Visa is accepted. But there are some key differences compared to traditional credit cards:

• Secured Card – The Self Visa is a secured card, meaning it requires an upfront security deposit that becomes your credit limit. This deposit is fully refundable when you close the account in good standing.

• Relatively Low Deposit – The minimum deposit is only $100, lower than many other secured cards that often require $200 or more.

• Flexible Funding – You don’t need the full $100 up front. You can open a Credit Builder Account and make monthly payments as low as $25 that go toward the security deposit.

• No Hard Credit Check – There is no hard credit inquiry when applying, so it won’t hurt your credit scores.

• Reporting to Credit Bureaus – Responsible use of the card is reported to Equifax, Experian, and TransUnion to help build your credit history.

So while Self doesn’t directly issue credit cards, the Self Visa is a legitimate secured credit card that can help establish credit history when used properly. The low deposit and alternative funding options make it accessible for those with limited funds or poor credit.

The Benefits of the Credit Builder Account

In addition to the secured card, Self’s Credit Builder Account is a smart option for building credit and savings simultaneously. Here’s an overview:

• Installment Loan – This account works as an installment loan with fixed monthly payments from $25 to $150. Each payment goes toward the loan principal and interest.

• Credit Reporting – On-time payments are reported to all three credit bureaus to help build your credit history.

• Savings Component – Your monthly payments accumulate in a FDIC-insured account that you get back when the term ends, unlike interest paid on a regular loan.

• No Credit Check – There is no credit check required to open a Credit Builder Account.

• Funds for Secured Card – You can use funds saved in the Credit Builder Account to cover the deposit for the Self Visa Card once eligible.

The Credit Builder Account gives you an accessible way to prove you can manage credit responsibly while also saving up money in the process. And with credit history established, you may become eligible for other unsecured credit cards down the road.

How Self Card Payments Affect Your Credit Score

When used properly, Self’s products can have a positive impact on your credit scores. Here are some key points:

• On-Time Payments – Making on-time minimum payments each month on the Self Visa Card or Credit Builder Account is essential. This good payment history gets reported to the credit bureaus.

• Credit Mix – Having both revolving (Self Visa) and installment (Credit Builder) accounts can improve your credit mix, which accounts for 10% of your FICO score.

• Lower Utilization – Keeping your credit card balance low compared to the limit helps lower your credit utilization ratio, which makes up 30% of your score.

• Age of Accounts – Over time, keeping your Self accounts open builds up the length of your credit history, accounting for 15% of your FICO score.

• Inquiries – The soft credit check for Self accounts results in no hard inquiries, so your score doesn’t take an initial hit. However, upgrading later may result in an inquiry.

Alternatives to Consider

While Self provides an accessible option for building credit, especially for those with no credit or very poor scores, it’s not the only choice. Some other options to consider include:

• Secured credit cards – Many banks offer secured cards with low minimum deposits, no annual fee, and even rewards. Examples are Capital One Secured and Discover it Secured.

• Starter unsecured cards – Some banks offer unsecured cards for new credit builders, like the Petal 1 Visa Credit Card and Discover it Student Cash Back.

• Credit builder loans – Products like loans from Credit Strong allow you to report on-time payments without requiring a deposit upfront.

• Authorized user status – Asking a friend or family member with good credit to add you as an authorized user on their credit card account can help establish history.

• Credit builder services – Companies like Self, but also others like Chime and Varo, are examples of fintechs providing services to make building credit accessible.

Consider both the pros and cons of Self and weigh the alternatives to decide which option may be the best fit for your situation and credit-building needs.

The Bottom Line

While Self does not directly issue credit cards, its unique product mix can help those with poor or no credit history to begin establishing good credit habits. The combination of the affordable Self Visa secured card and the Credit Builder installment loan provides an accessible starting point. As you demonstrate responsible credit management, your scores will gradually improve, opening the door for other unsecured cards and financing options.