How does Fig Loans help build credit?
Posted on: 31 July 2017
At Fig, we’re not focused on being the biggest lender out there. We’re not even focused on being the second biggest. We’re focused on helping hard-working Texans get the financial products they deserve. Step 1 is the opportunity to build healthy credit.
That’s why we report all of our payments to the main credit bureaus. Reporting payments to the credit bureaus is the first step to helping our customers build healthy credit because it establishes a track record of good payments.
Since we report payments to the credit bureaus, we’ve wondered how a Fig Loan helps build our borrower’s credit scores. If someone makes all of their payments on time does their credit score go up by 5 points? 15? Lucky for us, we were able to work with one of our main credit bureau partners to find that answer.
The first step to answering “How does a Fig loan impact on credit score?” is understanding what a credit score is made of.
“While your credit reports are simply a track record of your payment history… your credit score is more akin to your school GPA. It’s a number that measures your success relative to others, [and] in this case grading you on your credit-worthiness as an individual”. This means that on time, consistent payments on your loans are similar to good grades that help boost your GPA while defaults and delays past 30 days are similar to bad grades that pull your GPA down.
Just like how a good GPA gives you access better education, building a good credit score gives you access to better financial products. The infographic below shows the range of credit scores and what those scores provide access to.
So, as a person’s credit score increases, they have access to more and better financial products. For example, someone with a poor credit score of 400 only has access to payday loans. But someone with a credit score of 550 can apply for a government assisted mortgage and a secured credit card.
The chart below shows the most common credit score bands that our customers are in:
The average Fig borrower comes to us with a 520 credit score. After taking out a Fig Loan and making their payments (with a 4 week grace period for rescheduling!), customers who have been with Fig for 8 months on average saw an increase of 47 points in their credit score!
Numbers are great, but what this mean in the real world?
When the average borrower starts with Fig, they’re often only able to access payday loans. But borrowers who worked with us and made all of their payments on time are able to access government assisted mortgages and secured credit cards offered by major banks. Our study proves that Fig Loans places customers on a bridge to being financially healthy.
Recently, we launched our credit builder loan for customers who want to focus on building credit.The coolest part? Fig’s credit builder loan helps you save money while you build credit!
Fig's credit builder loan works like a locked savings account that builds credit. The credit builder loan ranges from $500-$1000 with monthly payments as low as $48.25.
Sometimes building credit seems impossible— you need to get credit to build credit... but if you have bad credit no one will give you credit! What a catch-22! This is exactly why we created Fig’s credit builder loan which doesn’t require a credit check. Beyond that, our credit builder loan has no upfront deposit and no application fee. It’s part of our mission to create affordable financial products for all Americans. To learn more check out our credit builder at www.figloans.com/credit-builder!