Credit Builder: How does credit reporting work?

By Chime Team
September 14, 2020

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 Chime’s Credit Builder card or considering signing up, it’s important to understand how it can help build your credit. To start, let’s jump into the basics: like how credit reporting works, and tips for how to get the most out of your Credit Builder card!

  1. When does Chime report?
  2. How Credit Builder works
  3. What does Chime report on?
  4. What doesn’t Chime report on?
  5. Score change: What to expect

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. 

How Credit Builder works

Adding money

In a nutshell, you start by moving money into your Credit Builder secured account. And that money sets your Available to Spend on the card. 

Making purchases

When you make a purchase using your Credit Builder card, the amount that you just spent on the purchase is held in your secured account – this way you won’t spend more than you have. Your Available to Spend will also go down, so you know how much more you can spend with your Credit Builder card.

Paying 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 Building feature, Chime will automatically use your money 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. The 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. 

What does Chime report on?

Now that you got the basics, let’s break down the main things Chime reports on:

  • Outstanding balance owed: The balance not paid off from the prior month.  If you paid off your last statement in full, your outstanding balance should be $0. 
  • Payment status: The status of your payment. Your payment status is a reflection of whether or not you paid last month’s statement. 
  • Current balance: The amount you have spent since the last statement plus any outstanding balance owed, if you owe something.  

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 percent utilization to the major credit bureaus because it has no pre-set credit limit. That means spending up to the amount you added will not show a high-utilization record on your credit history.

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 is 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 making payments on time and continuing to work on positive credit habits, your credit score can improve. That’s why it’s very helpful to turn on the Safer Credit Building feature, so you can continue to make payments on time and improve your credit (and maybe even surpass where you started before you opened your account! 🤯)*

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! 💪

 

Banking services provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card is issued by The Bancorp Bank or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The Chime Visa® Credit Builder Card is issued by Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see back of your Card for its issuing bank.

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*Based on a representative study conducted by TransUnion®, members who started using Chime Credit Builder in September 2019 observed a median credit score (VantageScore 3.0) increase of 30 points by January 2020. Impact to score may vary and some users' score may not improve.

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