A Credit Builder loan is an easy way for a borrower who has little or no credit to begin building credit. It is a share secured loan that is secured by the money disbursed from the loan. The disbursal is put straight in their share/savings account and used as collateral for the loan.

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This can help the members learn to not only make loan payments, but the satisfaction of saving money as well, if they have the entire amount secured until the loan is paid off. For example, if they do a loan for $500, they will make the minimum payments for the term of the loan (preferably 18 months or longer, since we like to see at least 18 months on at least 3 trades to not be a thin file), and at the end of the loan term, they will have $500 available in their savings!!

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• An application should be included in the loan docs.

• There is no need to pull a credit report or require proof of income, but if we have access to this information, it should be included in the loan docs.

• Key the member's credit score on the Credit Score Tab under the Credit Bureau Score as 999 and input Share Secured in the credit bucket under Credit Union Score.

• Standard 4% interest.

• Any term length but preferred no longer than 3 years.

• Don't forget the pledge agreement in the loan docs!

• Add the account information in the collateral section in Loan Management in Forza and confirm that the account information is listed on the disclosures as the collateral.

• The loan disbursal must go straight into their savings account and be secured as collateral.

• The loan may be set up to secure the collateral for the entire term of the loan or so the secured balance decreases as the principal balance of the loan decreases. The member's choice should be indicated on the Pledge Agreement in the docs.