Self Financial Review: Is It a Scam or Legit?

Self Financial Review: Is It a Scam or Legit? 1

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Welcome to our comprehensive review of Self Financial, a unique service designed to assist individuals in building and improving their credit scores. Self Financial offers a distinctive approach to credit building, notably through its Credit Builder loans and the Self Visa® Credit Card, tailored for those with limited or damaged credit histories. In this review, we’ll delve into the details of Self Financial’s offerings, examining the costs, customer experiences, pros and cons, and how it compares with other credit-building alternatives. Our goal is to provide you with a clear, balanced perspective to help you determine if Self Financial is the right choice for your financial journey.

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Self Financial Review

Self Financial Products and Services

Self Financial stands out in the credit-building landscape with its innovative products designed to cater to individuals with no or poor credit histories. Let’s explore the key services offered by Self Financial:

  1. Self Credit Builder Account: This unique product operates differently from traditional loans. Instead of receiving loan money upfront, the borrowed amount is held in a Certificate of Deposit (CD) insured by the FDIC. You make regular payments over the loan term, and once it’s fully paid, the money is released to you, minus any finance charges. The Credit Builder Account is accessible to residents across all 50 states​​.
  2. Self Visa® Credit Card: Unlike most secured credit cards, the Self Visa® card uses the savings in your Self Credit Builder account as the deposit. This card does not require a hard credit check to open. As you build your savings balance, your credit limit increases, which can be beneficial for your credit utilization ratio—a crucial factor in credit score calculations. This card comes with a $25 annual fee and operates similarly to a secured card in terms of payments being made from your checking account​​.
  3. Credit Impact: Regular, on-time payments towards your Self Credit Builder account and the use of the Self Visa® card can positively impact your credit score. This dual approach—combining a revolving line of credit and an installment line—helps in building a robust credit profile. However, late payments or high balances can negatively affect your score​​​​.
  4. Accessibility and Flexibility: Self Financial’s products are designed for those with a poor payment history, a lack of revolving credit, or a high credit utilization ratio. The company offers a range of payment options to suit various budgets, promoting financial inclusion and accessibility.

These products represent Self Financial’s commitment to providing practical and accessible solutions for credit building, making it an appealing option for those looking to improve their financial standing.

Self Financial Cost and Fees

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Understanding the costs associated with Self Financial’s services is crucial for consumers considering this path to credit building. Here’s a breakdown of the fees and charges:

  1. Administrative Fee: Self charges a one-time, non-refundable administrative fee of $9 for all plans. This fee is essential to note as it’s an upfront cost incurred regardless of the chosen plan​​.
  2. Interest Rates and APRs: Self Financial’s Credit Builder Accounts have varying interest rates and APRs depending on the chosen payment plan. For example:
    • A monthly payment of $25 over 24 months carries an interest rate of approximately 14.14% and an APR of 15.92%, resulting in a finance charge of about $89.
    • Higher monthly payments like $150 over the same period have a slightly higher interest rate of around 15.58% and an APR of 15.88%, with a finance charge of approximately $533​​​​.
  3. Total Costs: The total amount paid over the term includes the principal, interest, and administrative fee. For instance, a $25 monthly payment plan for 24 months would amount to a total of around $600, while a $150 monthly plan would total approximately $3,600 over the same period​​​​.
  4. Loan Terms and Conditions: The terms of Self Financial’s loans are straightforward, with a standard duration of 24 months for most plans. It’s important to understand that committing to a higher monthly payment doesn’t expedite credit score building but can save on interest fees over time​​.

These costs are pivotal in evaluating the overall value of Self Financial’s products, especially when considering them as a tool for credit improvement and financial management.

Customer Experiences with Self Financial

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Customer feedback plays a pivotal role in assessing the effectiveness and reliability of financial products like those offered by Self Financial. Based on customer reviews and ratings, here’s an overview of the experiences users have had:

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  1. Mixed reviews on Trustpilot and BBB: Self Financial’s customer service ratings are varied. On Trustpilot, the company has a moderate rating of 2.9 out of 5, based on a limited number of reviews. However, it’s important to note that Self is accredited by the Better Business Bureau (BBB) and holds a B rating, indicating a generally positive reputation in the industry. This accreditation suggests a level of trustworthiness and commitment to resolving customer complaints​​.
  2. Positive Credit Building Experiences: Many customers have reported success in building or improving their credit scores using Self Financial’s products. The Credit Builder Account, in particular, has been highlighted for its effectiveness in creating a positive payment history, which is crucial for credit score improvement. The fact that all payments are reported to the three major credit bureaus is a significant advantage for users looking to establish or rehabilitate their credit profiles​​.
  3. Customer Service Experiences: There are mixed experiences regarding Self Financial’s customer support. Some users have praised the company for its helpful and responsive customer service, while others have encountered challenges in communicating or resolving issues. This variability in service experience is not uncommon in the financial sector, but it’s something potential customers should be aware of.
  4. User Interface and Accessibility: The ease of use and accessibility of Self Financial’s platform, including its website and mobile app, have been positively noted in several reviews. The interface’s ability to motivate users to keep making timely payments by showing their progress is a feature that has been well-received.

Overall, while there are some mixed reviews, the majority of customer feedback suggests that Self Financial can be an effective tool for credit building, especially for those with limited or poor credit histories.

Self Financial Pros and Cons

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Self Financial, like any financial service, comes with its own set of advantages and disadvantages. Understanding these can help consumers make informed decisions about using their services.

Pros:

  1. Credit Reporting: One of the primary benefits of Self Financial is that all payments are reported to the three major credit bureaus, helping users build or rebuild their credit profiles effectively​​.
  2. Forced Savings Mechanism: The structure of the Credit Builder loan acts as a forced savings account, where the money paid (minus fees and interest) is returned at the end of the term, encouraging savings discipline​​.
  3. No Credit Check for Approval: Self Financial doesn’t require a credit check for approval, making it accessible for those with poor or no credit history. This inclusivity is a significant advantage for those struggling to find credit-building options​​.
  4. Competitive Interest Rates: Compared to some credit card interest rates, Self Financial’s interest rates are often lower, making it a cost-effective option for building credit​​.
  5. Diversification of Credit Mix: Using an installment loan like Self Financial can diversify a user’s credit mix, which is beneficial for the credit score​​.

Cons:

  1. Potential for Negative History with Bank Accounts: Users with a negative history with bank accounts may face challenges in qualifying for Self Financial’s services​​.
  2. Late Payments Penalties: Late payments are reported to credit bureaus and could significantly damage your credit score. Additionally, missing the grace period incurs a 5% penalty on monthly payments​​.
  3. Minimal Interest on CD: The interest earned on the Certificate of Deposit (CD) is relatively low, providing minimal financial gain from a savings perspective​​.
  4. Costs Associated with Loan: While beneficial for credit building, the service does incur costs, including interest and a non-refundable administrative fee. This aspect might make it less appealing compared to free credit-building methods​​.

In summary, Self Financial provides a valuable service for those looking to build or improve their credit scores, especially for individuals with limited options due to their credit history. However, it’s important to weigh the costs and the discipline required against the potential benefits.

Self Financial vs. Alternatives

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When considering credit-building strategies, it’s important to compare Self Financial with other available options. This comparison will help potential users understand where Self Financial stands in the spectrum of credit-building tools.

  1. Secured Credit Cards: A common alternative to Self Financial is a secured credit card. These cards require an upfront deposit that serves as your credit limit. Unlike Self Financial, which offers a controlled environment for credit building with its Credit Builder Account, secured cards provide a revolving line of credit. This means you can reuse the credit as you repay it. Secured cards can transition to unsecured cards over time, potentially offering a longer credit history and avoiding annual fees, a feature not available with Self Financial’s products​​​​.
  2. Credit Builder Loans vs. Revolving Credit: Self Financial’s main product is an installment loan (Credit Builder Account), which differs from the revolving credit offered by secured cards. With Self Financial, the user pays a set amount over a period, while secured cards allow continuous borrowing and repayment. This difference impacts credit utilization and the way credit history is built​​​​.
  3. Initial Costs and Credit Checks: One of the advantages of Self Financial over secured credit cards is the lack of a hefty initial deposit. Secured cards often require deposits ranging from $200 to $2,500, which can be a barrier for some users. Additionally, Self Financial doesn’t base approval on credit history, making it more accessible to individuals with poor or no credit history​​​​.
  4. Free Credit-Building Methods: It’s also important to note that there are free ways to build credit, such as becoming an authorized user on someone else’s credit card or ensuring rent payments are reported to credit bureaus. These methods, however, might not be feasible for everyone and don’t offer the structured approach of Self Financial​​​​.

In conclusion, while Self Financial provides a unique and structured way to build credit, especially for those with limited options, it’s important to consider the costs, the nature of the product (installment loan vs. revolving credit), and the alternatives available. Each individual’s financial situation and goals will determine the most suitable option.

How to Get Started with Self Financial

Opening a Credit Builder Account with Self Financial is a straightforward process that can be completed online. Here’s a step-by-step guide to getting started:

  1. Eligibility Check: Before applying, ensure you meet the basic requirements – being a U.S. resident and having a valid bank account, debit card, or prepaid card for payments. No credit history is required, making Self Financial accessible to a wide range of users.
  2. Account Creation: Visit Self Financial’s website or use their mobile app to create an account. You can sign up with an email address or through a Facebook account. The process includes providing your Social Security number for identity verification purposes. Self Financial performs a soft credit pull, meaning it won’t affect your credit score​​.
  3. Selecting a Plan: Choose a monthly payment plan that fits your budget. Options range from as low as $25 to as high as $150 per month. Each plan has a 24-month term, with varying interest rates and APRs. This decision will determine the total loan amount and the finance charge over the life of the loan​​​​.
  4. Payment and Fees: Upon selecting a plan, you’ll be required to pay the $9 non-refundable administrative fee. Following this, monthly payments will start, which are reported to the three major credit bureaus, aiding in building your credit history​​.
  5. Monitoring Progress: Throughout the term, you can monitor your progress and credit score changes through the Self Financial dashboard. This feature helps in keep track of your credit-building journey and stay motivated.

By following these steps, you can begin your journey with Self Financial towards building or improving your credit score. It’s a process that requires discipline and consistency, but can be rewarding in terms of credit improvement and financial empowerment.

Conclusion

In conclusion, Self Financial offers a unique and accessible way for individuals to build or improve their credit scores, especially for those with limited or poor credit history. Its Credit Builder Account and Self Visa® Credit Card provide practical tools for establishing a positive payment history. However, it’s essential to consider the costs involved, including interest rates and administrative fees, review BBB reviews, and compare them with other credit-building alternatives. Ultimately, Self Financial can be a valuable part of your financial toolkit, as long as you understand its structure and are disciplined in making timely payments to achieve your credit goals.

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Frequently Asked Questions

  1. How does a Self Financial Credit Builder Account work? A Credit Builder Account with Self Financial is a unique financial product where the loan amount is held in a Certificate of Deposit (CD) while you make regular payments. Once the loan is fully paid, you receive the money minus any finance charges.
  2. What are the interest rates and fees for Self Financial products? Self Financial charges interest rates between approximately 14.14% and 15.58%, with APRs ranging from about 15.72% to 15.97%, depending on the chosen payment plan. There is also a one-time, non-refundable administrative fee of $9 for all plans.
  3. Can Self Financial help improve my credit score? Yes, timely payments on the Self Financial Credit Builder Account are reported to the three major credit bureaus, which can help in building or improving your credit score.
  4. Are there alternatives to using Self Financial for credit building? Yes, alternatives include secured credit cards, becoming an authorized user on someone else’s credit card, or using other credit builder loans. Each option has its own set of advantages and considerations.
  5. Is there a penalty for late payments with Self Financial? Late payments are reported to the credit bureaus and could negatively impact your credit score. Additionally, missing the grace period incurs a 5% penalty on monthly payments.

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