Kikoff Credit-Builder Loan Review 2020

The hardest part about building a credit history is getting access to credit in the first place.

If becoming an authorized user on someone else’s credit card is not an option for you or you cannot afford the deposit on a secured card, Kikoff offers a cheap and simple way to build credit.

The San Francisco-based online lender gives you a $12 credit-builder loan that you pay back in 12 monthly installments of $1 each. Your payments are reported to credit bureaus, allowing you to build a credit score from scratch.

Kikoff says there’s no credit check involved, no need to have a bank account, and no interest or fees. “This credit builder product will always be free, for as long as this company exists,” says Cynthia Chen, Kikoff’s co-founder and CEO. Chen says she started Kikoff because she wanted to “do something mission-driven that could potentially change the financial lives of millions of people.”

Kikoff rolled out its credit-builder loan in the first quarter of 2020 and has tens of thousands of users, Chen says. Kikoff users who are new to credit typically establish a VantageScore 3.0 within 30 days and a FICO score within six months, she says. If you already have credit but need to build it after some missteps, Kikoff is one of several options you can explore.

Here’s a summary of the Kikoff credit-builder loan:

How a Kikoff credit-builder loan works 

Kikoff makes a small loan at no cost to the applicant. There's no credit check involved, and $12 is the only loan amount you can get. The money is deposited into a digital wallet that users can access for the loan term, Chen says. You can cash out the $12 via paper check if you need the money, but you still have to pay back the loan amount.

Twelve dollars may seem like a small amount, but paying on time is the most important factor that influences your scores. The size of a loan isn’t what’s important; it’s the making payments on time to establish a good track record.

Payment is due every month, and you can pay it using the funds in your digital wallet. Kikoff sends you a reminder when payment is due.

If you have no prior experience with credit, your payments are reported to all three credit bureaus, Chen says. If you already have a score or history, your payments are reported to Experian and Equifax only.

Kikoff’s credit-builder loan shows up like any other installment account, such as an auto loan, on your credit reports. Your scores are calculated from information in your credit reports.

Kikoff also gives borrowers access to a free VantageScore from Equifax to track their progress. You can always use NerdWallet to track your free VantageScore from TransUnion and see your credit report.

Kikoff fees and penalties

Kikoff loans don't carry any interest. As with any other form of credit, paying late or missing a payment can hurt your scores. Due to the pandemic, Kikoff is currently giving users a 90-day grace period if they miss a payment, Chen says.

Normally, paying a bill 30 or more days late can seriously damage your credit and you may have to pay a late fee to your lender. (Kikoff doesn't currently charge a late fee.)

How to apply for a Kikoff credit-builder loan

You can apply on Kikoff’s website by providing personal details such as your name, phone number, address and Social Security number.

There is no credit check involved and you don't need to provide access to your bank information. Once your identity has been verified and you are approved, the loan money is deposited into your digital wallet.

You can make payments every month through your digital wallet.

Kikoff vs. Self

Self is a lender that also offers credit-builder loans as well as a secured credit card to help people establish credit. Self is available in all 50 states; Kikoff doesn't lend in Delaware, Idaho, Indiana, Louisiana, Maine, Mississippi, Nevada, North Dakota and Rhode Island.

Self isn't free; you have to pay an administrative fee for its credit-builder loan as well as a finance charge. It has a much higher loan amount, starting at $600 and going up to $1,800. With Self, you can establish credit and build savings at the same time.

Unlike Kikoff, you don't have access to the loan money immediately. Instead, Self places the money in a certificate of deposit account and releases it to you when you finish making monthly payments for the loan term.

You can pay your loan back early at both lenders if you have established a good credit score and are ready to apply for traditional loans or credit cards.

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