What we like:
No credit check, easy-to-use app, and cash advances up to $300.
|Rates (APR)||Starting at 5.99%|
|Repayment terms||12 months|
|Fees||$19.99 per month|
|State availability||42 states and the District of Columbia|
For a decade, MoneyLion has aimed to help consumers who don’t feel the traditional banking experience meets their needs. The financial technology (fintech) company serves customers via a highly rated mobile app with products such as a checking account, automated investing, and access to cryptocurrency.
Borrowers with bad or no credit can also try MoneyLion’s credit builder loan, Credit Builder Plus. For a fee, the loan can help you boost your credit score—50% of members increase their score by 42 points within 60 days. But as our MoneyLion credit builder review explores, it’s different from a traditional loan.
In this review:
- How MoneyLion credit builder loan works
- How MoneyLion helps build credit
- Pros and cons
- MoneyLion eligibility requirements and application process
How MoneyLion credit builder loan works
MoneyLion offers members a credit-building personal loan through Credit Builder Plus, a paid membership available within the MoneyLion app. It costs $19.99 a month, but if you’re trying to repair your credit score or establish a credit history, it could be worth the cost.
Credit Builder Plus aims to help you establish 12 months of on-time payments, which MoneyLion reports to all three major credit bureaus. To get you there, MoneyLion will loan you up to $1,000 with no hard credit check.
But here’s where Credit Builder Plus and similar credit builder loans differ: You don’t get access to the entire loan amount. Instead, MoneyLion gives you a portion, and the rest goes into a Credit Reserve Account.
You’ll make on-time monthly loan payments, including interest, for the next 12 months to boost your score. At the end of the loan, MoneyLion will release the remaining funds from the Credit Reserve Account. The money’s yours to spend as you want.
MoneyLion credit builder features
In addition to the loan, MoneyLion offers several features to help you on your credit journey:
- Credit monitoring: Check your progress in the MoneyLion app as you work to repair your score.
- Cash advances: Credit Builder Plus members can take out cash advances up to $300 each pay period, with no interest.
- Waived fees: MoneyLion offers an investment account and a bank account (RoarMoney), both of which have fees. MoneyLion waives those fees when you take out a credit builder loan.
- Rewards: MoneyLion offers a cash-back rewards program called Lion’s Share. Each month, you can earn up to $19.99. The rewards program is tiered and encourages regular spending and app usage to reach the next level. Participating might not be the best idea if you’re struggling with finances.
- No credit check: When you apply for traditional personal loans, lenders will conduct a hard inquiry on your credit report, which lowers your score. MoneyLion instead does a soft pull with no impact on your credit.
- Automatic payments: You can set up autopay so you never miss a payment. Just ensure you have enough money in your bank account to cover the cost.
MoneyLion credit builder costs
Nothing in life is free—even building credit. MoneyLion makes it easy to boost your score, but it’ll cost you a significant chunk of change.
For starters, you’ll pay $19.99 monthly for Credit Builder Plus. In theory, you can offset it through the Lion’s Share rewards program, but most members who are repairing a bad credit score may not be in a place to spend with the debit card as often as the program requires.
Then there’s the high APR potential on the loan. You’ll pay between 5.99% and 29.99% APR. The average personal loan APR in the U.S.? Just 11.21% as of November 2022, according to the most recent data available from Federal Reserve.
How MoneyLion helps build credit
MoneyLion says half its members experience an average 42-point increase in their credit scores within the first 60 days of their loans. But how does it work?
MoneyLion will review your application and determine a loan amount—up to $1,000—giving you a portion of the loan and keeping the rest in a Cash Reserve Account. You’ll make on-time payments each month for 12 months.
MoneyLion reports those on-time payments to all three major credit bureaus (Experian, Equifax, and TransUnion) every month. This is crucial: FICO says payment history makes up 35% of your credit score. And for your VantageScore, it’s 40%.
MoneyLion’s loan only goes so far. You can take additional steps before, during, and after the loan to further improve your credit, including:
- Leave old accounts open: Have an old credit card you don’t use anymore? Don’t close it, but also don’t use it. A longstanding credit card increases your average credit age—and thus your score.
- Keep your credit utilization low: Leave your credit cards at home, so you won’t be tempted to spend them. Doing so means you’re using less of your available credit, which can help your score.
- Avoid hard inquiries: Don’t apply for credit unless needed. Let MoneyLion’s loan do its thing for your score. Avoiding hard inquiries during this time will increase your odds of boosting your score.
You can track your progress in the app. MoneyLion’s credit monitoring tool shows how you’re doing across payment history, credit age, credit utilization, and credit inquiries.
Note: When deciding whether a MoneyLion credit builder loan is right for you, ensure you can afford the total monthly payment: the loan payment with interest plus the $19.99 fee.
Pros and cons of a MoneyLion credit builder loan
For our MoneyLion credit builder review, we’ve uncovered several advantages to the loan program—and five drawbacks.
Credit score boost:
The most significant appeal of a MoneyLion credit builder loan is an improved credit score. Just make on-time payments, and you should be set.
No credit check:
MoneyLion helps you avoid negative impacts on your score by approving loans with only a soft credit pull.
Highly rated mobile app:
The MoneyLion app is easy to use and has high star ratings in the Apple App Store and Google Play.
One major perk is access to a 0% APR cash advance every pay period. You can get up to $300 if you need help covering a bill until your next paycheck.
Paying $19.99 a month on top of the loan payment (even though you don’t have full access to the loan) takes away some of the appeal of this option.
Rates may start at an attractive 5.99%, but they go as high as 29.99%.
No access to funds:
Despite the high fees and APRs, you don’t get the entire loan amount. A portion of it stays with MoneyLion, meaning you can’t use it to pay for emergencies or even let it earn interest in a bank account.
It’s terrific that MoneyLion offers rewards options to offset the loan fees. The problem? The rewards encourage regular spending with a debit card. If you’re trying to rein in your budget, the Lion’s Share program may be counterproductive.
Not available in every state:
As of March 2023, MoneyLion doesn’t lend to borrowers in Colorado, Indiana, Iowa, Maryland, Montana, Nebraska, Nevada, or Vermont.
MoneyLion eligibility requirements and application process
Qualifying for MoneyLion’s Credit Builder Plus program is attainable for most consumers who need help with their credit. There’s no credit check and no security deposit to get started.
To apply, you must:
- Be a U.S. citizen or permanent resident 18 or older.
- Have a checking or spending account in good standing that’s been open for at least 60 days.
- Have a Social Security number.
Follow these steps to apply:
- Download the MoneyLion app. You can also sign up on a desktop, but MoneyLion will try to steer you to mobile with a QR code. You’ll want the app to manage your account. Plus, you must open it regularly to qualify for the tiered rewards.
- Sign up. You’ll enter basic information, such as your name, email address, date of birth, address, and phone number. Ensure your information matches how it appears on your checking account and public records.
- Apply for Credit Builder Plus. After creating your account, you can apply for Credit Builder Plus. Be ready to link a checking account in good standing.
MoneyLion will do a soft credit pull before approving you and offering loan details (including amount, APR, and monthly payment). The lender may also ask you for proof of identity, proof of address, a bank statement, or a utility bill for verification.
Alternatives to MoneyLion credit builder loan
MoneyLion is a solid option to boost your credit score. It includes perks and a rewards program to offset the monthly fee, and the mobile app is easy to use and has high ratings.
That said, MoneyLion isn’t your only option if you’re trying to improve your credit score—and it’s not for everybody. For starters, you need a checking or savings account, which leaves out an estimated 4.5% of households in the United States.
And while MoneyLion is available in 42 states and Washington, D.C., you can’t apply for the program if you live in:
Don’t sweat it: If you can’t qualify or a MoneyLion Credit Builder loan just isn’t right for you, you have other options.
Other credit builder loans
MoneyLion doesn’t corner the market on credit builder loans. Other fintechs offer similar loan options, in which they hold some or all of the loan amount while you make payments.
Not sure where to start? We’ve reviewed and ranked the four best credit builder loans available. See which might be a good fit for you.
Secured credit cards
Secured credit cards minimize risk to the credit card company because you must make a security deposit to access the card. Your spending limit is often equal to the value of the security deposit.
Most secured credit cards are straightforward and help you build credit with regular on-time payments. However, some of the best secured credit cards offer cash-back rewards and may increase your credit limit after a period—without an additional security deposit.
Unsecured credit cards for bad credit
If you have a poor or even fair credit score, you may struggle to qualify for an unsecured credit card—one that doesn’t require a security deposit. However, unsecured cards aimed at borrowers with a shaky credit history or no history are available.
The downside? You can expect high APRs and annual fees for many of these cards.
Secured personal loans
A secured personal loan is similar to a credit builder loan in that lenders find a way to minimize their risk. In this case, you must offer collateral to “secure” the loan, often the money in your savings account or even your car.
Sometimes, applying for a credit card or loan isn’t the best option. If you have a friend or family member with good or excellent credit who’s willing to add you as an authorized user to their card, you may be able to increase your credit score without taking any risks.
As an authorized user, you’ll get a card to spend money as if it were your own—but the other person, not you, is on the hook for footing the bill. Spending responsibly is essential—and only with the cardholder’s approval.
If you only want the benefits of being on a cardholder’s account, ask to be added as an authorized user, but don’t carry your own card. As long as the other person is a responsible cardholder—on-time payments and low credit utilization—you should expect a bump in your score over time.