Your credit score is an integral part of your financial life, yet the mechanics behind it can feel mysterious at best. And considering how much it can determine real-life things – like approval for loans, lines of credit, apartment rentals, and more – it matters!
If you’re currently using the Chime Credit Builder Visa® Credit Card¹ or considering signing up for our new secured card, it’s important to understand how it can help build your credit. To start, let’s jump into the basics: how it works, what we report on, and what to expect!
- How Credit Builder works
- How is my credit score determined?
- How is your credit score calculated?
- What does Chime report on?
- What doesn’t Chime report on?
- When does Chime report?
- Score change: What to expect
How Credit Builder works
Set your available to spend
To start, simply move money into your Credit Builder secured account. The money you add will set the available to spend on your card.
Make purchases
When you make a purchase using your Credit Builder card, we subtract that amount from your available to spend on your card. That way, you won’t spend more than you have in your secured account. And there’s always money set aside to make payments on your card!
Pay balances
The total amount you spend with your Credit Builder card is your balance. At the end of the month, you can then use the money set aside in your secured account to pay your monthly balance.
If you choose to turn on the Safer Credit Building² feature, Chime will automatically use the money set aside to pay off any outstanding balance. This way, you always pay on time, one crucial aspect of building credit. (Go to Settings > Credit Builder Card > Safer Credit Building)
If you choose to pay manually, you’ll receive a notification to pay your statement every month.
☝️Remember: Current balance and Available to Spend are not the same thing. Your Available to Spend is how much you can spend with your Credit Builder card, the current balance is how much you have spent so far.
How is my credit score determined?
Your credit scores are determined by credit bureaus. Every month, credit card companies and lenders will report your activities to credit bureaus, who then update your credit score based on the activities reported. Chime reports to all 3 major credit bureaus, Experian®, Transunion® and Equifax®, to help you build credit history over time.
How is your credit score calculated?
Although there are few different types of credit scores, FICO® scores are used by 90% of top lenders are calculated based on the following five factors:
- Payment history (35%)
- Credit utilization (30%)
- Credit age (15%)
- Credit mix (10%)
- Inquiries for credit (10%)
Now that you know how much each factor impacts your score, let’s dive into how Credit Builder does reporting differently.
What does Chime report on?
Now that you got the basics, let’s break down the main things Chime reports on:
1. Payment status: Your payment status is a reflection of whether or not you paid last month’s balance.
Pro Tip: If you have the Safer Credit Building² feature turned on, then the money that you previously moved into Credit Builder will automatically be used to pay your monthly balance. That way, you’ll always pay on time, a key factor for building credit.
2. Amount past due: The balance not paid off from the prior month.
Reminder: Every time you make a purchase, that amount is set aside and held in your secured account – so you never have to worry about not having enough at the end of month to pay your monthly balance!
3. Account age: The number of months you’ve been with Credit Builder.
In general, the older your account, the better! Because it proves you’ve been a trustworthy card holder over time.
4. Current balance: The amount you have spent since the last statement plus any amount past due.
Note: It’s totally normal to have a current balance.
What doesn’t Chime report on?
Because Credit Builder is different than traditional credit cards, there are a few items Chime doesn’t report on:
- Credit limit: Since you can set how much you want to spend on Credit Builder, the Credit Builder card does not have a pre-set limit
- Card utilization: Credit Builder doesn’t report credit utilization to the major credit bureaus because it has no pre-set credit limit. That means spending up to the amount you moved to Credit Builder will not show a high-utilization card on your credit history.
When does Chime report?
Chime typically reports to credit bureaus at the beginning of every month, but credit bureaus can take a few weeks to process reports – so you might not see the changes until later in the month.
Score change: What to expect
Credit Builder offers features that help you stay on top of key factors that impact your credit score. That means that the consistent use of Credit Builder can help you build payment history, increase the length of your credit history over time, and more.
We know this a lot of info, but it’s important to remember that building credit is a marathon, not a sprint! If your credit score dips a bit from opening a new account, don’t get discouraged: By simply making regular on-time payments, your credit score can improve². That’s why it’s very helpful to turn on the Safer Credit Building² feature, so you can continue to make regular payments on time and start building credit over time.
While Credit Builder can help a ton, it’s still key to stay on top of other financial activities or accounts you use outside of Chime. Building credit takes time so don’t give up, we’re here for you! 💪