You may be considering building your credit history. To build a credit history requires opening a credit line. Sincerely speaking, credit cards are one of the best ways to quickly build one.
But, credit cards are not free though. You get in debts using them. Right?
Hence, why Chime credit card builder was made to tackle this. With Chime credit builder card, you build your credit without getting in debt. This is because the card does not charge interest or late payment fee on purchases.
Before applying to get a Chime card, understanding how Chime credit builder works is important. Let me elaborate it for you below.
What Is A Chime Credit Builder?
Chime credit builder is a credit card. Chime can increase your credit through this card. The entry to it is quite low. You do not even need to have a good credit score to qualify for it. Regardless of your credit score- good or bad, Chime does not mind you getting it at all.
As I previously mentioned, the Chime credit builder card is mainly for the purpose of building credit history. Hence, the lack of the traditional credit card requirements. So, what qualifies you for the card?
You have to be a U.S citizen or permanent resident to qualify. Not just that, but also have a Chime checking account too. When I say a Chime checking account, I mean one set up with a direct deposit of $200 or more monthly.
To get the Chime Credit Builder card, you need a Chime account first. You can create a Chime account and apply for a Chime card.
So, does Chime credit builder card work?
Yes, it does and I will explain how it works below. That way, you know what you are getting yourself into after you have signed up for one. Personally, I think it is the most cost effective credit card you will ever get. Here is how the Chime credit builder work below.
How Does Chime Credit Builder Work
Chime credit builder works by reporting your ability to pay back debts to the three American credit bureau. I am talking about Experian, Transunion and Equifax. When it comes to reporting to them, Chime only reports your payment history.
Your credit utilization and limit are not factored into the report. Just the payment balance, amount and payment date. So, how does just the payment history build your credit then?
Well, payment history alone contributes about 35% of FICO score. I mentioned this on my article: Is FICO Score Accurate. Payment history is important to your FICO, which is the standard credit score model lenders use access your credit worthiness. Hence, the importance of making payment on time.
Otherwise, that is 35% of your FICO score being affected negatively. But, Chime claims people tend to see an improvement on their credit scores by +30 points to 71 points after some months. I do not think this is bad, since you are not getting in real debts anyway.
What do I mean by this, my good reader?
The Chime credit builder card is a secured card. It means you transfer money into the card account, use it for payment and pay it back into the card account before due date. So in reality, Chime has not loaned you any money. This is why I mentioned you will not get in debts doing it.
Do not get me wrong. You can screw up your credit score and history, when you miss payment. This is due to the monthly payment report to the credit bureaus by Chime. A missed payment is still frowned on, even if it is your money.
Pros & Cons Of Chime Credit Card Builder
I know I have hyped the Chime credit builder card, but it is not with its cons. So, what are the cons of Chime credit builder?
The following below are the cons of Chime credit builder card:
- You need a Chime checking account to get the card.
- Maintain a direct deposit of at least $200 monthly.
- There is no reward program.
- Full monthly repayment. Simply put, you spend $500, you pay $500 on due date.
The above is what you need to know about the disadvantages of a Chime credit builder card. Now, the benefits of the card are better than the disadvantages. Here are what you need to know about the pros of Chime credit builder.
- You can withdraw cash from an ATM. Or even better, use Chime spotme at ATMs with the card.
- There is an autopay feature that pays your debt early, so you do not miss a payment.
- You do not need a good credit score to get one.
- Finally, there is no fee whatsoever with the card. No annual, maintenance, interest or late fees.
From the above, I will leave you to judge whether this is a good secured credit score for you to build your credit with. Personally, I think it puts the other ones to shame. This is because it will literally not cost you a thing to use. Besides, you can pull money out with your Chime credit builder card.
Chime Credit Card Limit
What is the limit on Chime credit builder, my good reader?
The Chime credit builder card depends on you. When you get a new Chime card, it comes with three accounts- checking, secured deposit and credit builder accounts. Whenever you put money on your checking account, it is moved to your secured deposit account. Your Chime credit builder card account has access to this secured deposit.
As a result, any money on your secured deposit account is your Chime credit card limit. You cannot spend more than that. You always determine this limit. This is one great thing about Chime credit card.
So, how much can you overspend on Chime credit builder?
Unless you are using Chime SpotMe, it is kind of hard to overspend. This is due to the limit. The limit is tied to the amount automatically transferred to your secured account through the checking. If you are going to be in debt, it is due to borrowing from Chime SpotMe or the MyPay feature.
How To Use Chime Credit Builder
Once you activate your Chime card, just start spending with it. Be sure to pay off your balance before due dates. This is not to get a bad report on your credit history which will ruin your credit score.
Chime has an autopay feature. I recommend set it on, just in case you forget to payment due dates. The autopay will pay early on your behalf.
You can use your card as you see fit. This is because it is your money being spent. I would not worry about getting it debt. Just be sure to pay the balance back, because Chime reports your payment history to the credit bureaus.
Does Chime Help Build Credit?
So, does Chime credit builder card work?
If you ever wondered whether the Chime credit builder card work, you can see from this article that Chime really helps you build credit. This is without getting in great debts like most typical credit cards. You build credit with your own money.
I would recommend the Chime credit builder card to any young working class adult trying to build his or her credit. You can use the affiliate link above to get one for free. It will not cost you a dime. Or, just read How To Get A New Chime Card Without Stress article for the process.
Does Chime Have A Credit Card?