If you’re new to establishing a credit history (or have a low credit score), Kikoff offers a way to build credit through its Kikoff Credit Account.
The San Francisco-based fintech company gives you access to a revolving line of credit, which can help you build a positive credit history if you make on-time payments and maintain a low credit utilization.
There’s no credit check involved, so a non-existent credit history isn’t a barrier to opening this credit line. However, Kikoff’s fees and limitations may not make it the best option for you.
How the Kikoff Credit Account works
Kikoff offers revolving lines of credit with limits of $750, $2,500 or $3,500, depending on which plan you choose. The credit line is not for borrowing money in the traditional sense. Its sole purpose is to provide you with a revolving credit account to build your credit score.
While Kikoff does not check your credit score or history to approve you for the credit line, the open line will show up on your credit reports from the three major credit bureaus (Experian, Equifax and TransUnion).
You can only use the line of credit to charge your Kikoff monthly fee or make purchases on Kikoff's digital content store, which contains personal finance educational items, like e-books and e-courses.
The restrictions on how you can use the credit line is a significant limitation. You can’t use it to buy groceries or gas, finance a car repair or pay a medical bill. You cannot access cash through a check or other method.
Each month, you’ll pay at least the minimum due on your account balance — which includes Kikoff’s monthly fee and any charges from the digital store. Kikoff reports your payments to the three credit bureaus. Making on-time payments can help build your credit, while missing a payment can cause your score to drop.
Kikoff also gives you access to your credit report each week to track your credit-building progress.
Kikoff fees and penalties
Unlike many other types of credit lines, there is no interest charged against your Kikoff account balance. If you just make the minimum payments and don’t pay off the balance in full each month, you won't accrue interest.
However, you do have to pay a monthly fee to keep your account open. Kikoff charges monthly fees of $5, $20 or $35, depending on which plan you choose. If you keep the account open for a year, it’s equivalent to paying an annual fee of $60, $240 or $420.
Kikoff doesn't charge a late fee if you miss a payment, but it will report late payments to credit bureaus. Missing a payment by 30 days could cause your score to drop by 100 points or more.
Compare Kikoff plans
Here are the different plan options Kikoff offers:
Plan | Line of credit amount | Monthly fee | Other features |
Basic plan | $750. | $5. |
|
Premium plan | $2,500. | $20. |
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Ultimate plan | $3,500. | $35. |
|
More about Kikoff’s rent and bill reporting
Rent reporting: Kikoff will report your on-time rent payments to Equifax and TransUnion to help boost your credit scores. You’ll need to link the bank account you use to make rent payments, provide a valid lease and submit landlord information. The service is included with all three plans. For a one-time $50 fee, you can get rent payments over the past 24 months reported.
Bill reporting: If you choose the Premium or Ultimate plan, Kikoff will report your on-time phone and utility payments to TransUnion each month.
How to build your credit score with a Kikoff Credit Account
The most important factors affecting your credit scores are whether you make on-time payments, followed by how much of your revolving credit limits you use, known as your credit utilization.
Kikoff reports your monthly payments to the three major credit bureaus, which can help you build a positive payment history. Set up automatic payments to ensure you make your payments on time. Missing a payment on your Kikoff account could cause your credit score to drop.
A low credit utilization also benefits your credit score. If you keep your account balance at or below $75 on the basic plan, $250 on the premium plan or $350 on the ultimate plan, your credit utilization won’t exceed 10%. Experts commonly recommend keeping your credit utilization under 30%.
Kikoff vs. Self
Self is a lender that can also help you establish credit, but it does that by offering credit-builder loans.
A credit-builder loan has an inverse funding-and-payment schedule compared to a traditional loan. Rather than getting a lump sum of money upfront and then making monthly payments to pay off the loan, a Self credit-builder loan requires you to first make payments each month until you’ve reached your loan amount. Only after you’ve paid the total amount will you have access to that cash, minus the interest or fees.
Both Kikoff and Self are available in all 50 states. Here’s how their credit-building products compare:
Credit-building product | Kikoff Credit Account | Self Credit Builder Account |
|---|---|---|
Type of credit | Revolving line of credit | Installment loan |
Borrowing amounts | Credit limits of either $750, $2,500 or $3,500. | Loan amounts of either $600, $840, $1,152 or $3,600. |
Cost | Monthly fee of either $5, $20 or $35, plus minimum monthly payment on account balance. | Monthly payments of either $25, $35, $48 or $150 (equating to an APR under 16%). |
Performs hard credit check? | No. | No. |
Credit reporting? | Yes, reports to Equifax, Experian and TransUnion. | Yes, reports to Equifax, Experian and TransUnion. |
Offers secured credit cards? | No. | Yes. |
Offers rent reporting service? | Yes, reports rent payments to Equifax and TransUnion. | Yes, reports rent payments to all three credit bureaus. |
Other ways to build credit
Become an authorized user
If you have a family member or friend with a high credit score and long credit history, ask them to add you as an authorized user on their credit card. As they make on-time payments, your credit score can benefit from their good credit habits.
Ask someone to co-sign a loan for you
You may be able to qualify for a loan with a co-signer who has good credit. A co-signer doesn’t have access to loan funds, but they agree to be legally responsible if you miss payments. Someone who co-signs for you is putting their credit at risk, so think carefully about your ability to repay the loan.
Apply for a secured loan
Though most personal loans are unsecured, some lenders offer secured loans if you put up collateral, like a savings account or car. It can be easier to qualify for a secured loan, even if your credit history isn’t strong, because the lender can seize your collateral to recoup its losses if you don’t make payments.
Apply for a secured credit card
Some banks, credit unions and online lenders offer secured credit cards that require a cash deposit. Several allow you to switch to an unsecured card after a minimum number of on-time payments.
Credit-builder products from other financial institutions
Self isn’t the only financial institution offering credit-builder loans. You may also find them at credit unions and community banks. Additionally, you can explore using services like Experian Boost or a rent-reporting company to get your bills counted toward your credit score.
» MORE: How to build credit
