Top Loans for Building Credit

If you’re trying to build or rebuild credit, the goal isn’t just “get any loan.”

You want small, manageable products that report to the bureaus and are easy to pay on time, every time.

Start With KOHO Essential + Credit Building

KOHO isn’t a bank—We are a financial service company that offers a spending and savings account with a prepaid Mastercard®.

KOHO Essential is designed to work like a no fee monthly account for most people because:

• It has a low monthly plan fee that can be waived when you set up direct deposit or add +$1,000.

• Add Credit Building for $10/month, get a dedicated tradeline with no interest and we report it to Equifax

• Grow your savings with a 2% interest savings rate on your entire balance.

• Earn 1% cash back on groceries, eating & drinking, and transportation.

• Enjoy unlimited transactions (never worry about sending money to someone again).

What Makes a “Good” Loan for Building Credit?

If you do use a loan to build credit, look for:

• Reports to the credit bureaus – If it doesn’t report, it won’t help your score.

• Small, affordable payments – You should be able to pay comfortably, even in a bad month.

• Clear term and low fees – No confusing add-ons or junk fees.

• Real purpose – Ideally you’re using it for something useful (or as a credit-builder product), not just to have more spending money.

Top Credit-Building Loan Options

1. Credit-Builder Loans

These are small loans designed specifically to build credit.

Often:

• You “borrow” an amount that’s held in a locked account

• You make fixed monthly payments over a set term

• At the end, you get the money (minus fees), and you’ve built payment history

They’re simple and predictable—and work best when your budget is already stable.

2. Secured Credit Cards

Not a loan in the classic sense, but they behave similarly for your credit report:

• You put down a security deposit

• Your limit is often equal to that deposit

• The card reports like a regular credit card

Used properly (low balance, on-time payments), a secured card can be a strong credit building tool.

3. Small Personal Loans

A small installment loan from a bank, credit union, or reputable lender can help if:

• The interest rate is reasonable

• The payment comfortably fits in your budget

• You actually need what you’re financing (e.g., essential car repair)

This should be a supporting tool, not an excuse to overspend.

4. Auto Loans (If You Truly Need a Car)

If you genuinely need a vehicle and can afford it, an auto loan:

• Shows up on your report as an installment tradeline

• Can help build payment history

But it’s a big, long-term commitment—definitely not something to take on just for credit-building.

The Real Credit-Building Formula

No matter which product you choose, your score improves mainly from:

• On-time payments (every time)

• Low balances relative to your limits

• Sticking with accounts over time instead of constantly opening and closing