Self: Paving the Way to a Healthier Credit Score

Lauren Jackson uses a bowling analogy to explain Self.

Jackson, Self's content marketing manager, describes the fintech as the bumpers used to prevent your ball from ending up in the gutter.

“Once you get to be a better bowler, you can move the bumper lanes out of your way and take control on your own,” said Jackson.

She’s not being flippant, either. Instead, she’s explaining how the Austin-based company guides clients on the right path towards financial wellness through short-term loans that help them save and build credit at the same time.

Self is an alternative to predatory lending options, and has created roughly 320,000 credit-builder accounts since the company started four years ago. The company is featured in Fintech4Good and is one of many fintechs helping consumers become financially healthy.

Building Credit

Self's mission is to help consumers build credit. This mission is carried out through its Credit Builder Account, which is geared towards individuals without access to traditional financial products or those who are new to credit.

Through Self's Credit Builder Account, which offers an installment loan that enables those who make payments on time to build positive payment history, clients apply for a loan and then pay back the borrowed money within 1-2 years. Once the loan is paid back, then borrowers receive the money.* The money is not given to clients up front. Each month during the loan, the client's payment history is reported to all three major credit bureaus.

Jackson says many of Self's clients are immigrants who haven’t yet established credit in the United States. She adds that young people without any credit history also represent a good chunk of the company’s client demographic.

Women in their late 20s to early 30s are more prone to use the service than others, Jackson says. Based on the data, that shouldn’t be surprising – a Career Builder study Off Site Link finds that women live paycheck-to-paycheck more often than men.

“There are lots of products out there that are predatory and target low-income consumers with high interest rates. However, they're not helping people build credit,” said Jackson. “Self offers a product that can help people break that cycle so they can eventually access other, more traditional financial products.”

More than 40% of people in the United States don’t have the funds necessary to “survive in the modern economy,” according to recent statistics. That’s almost 51 million households that don’t have enough money to pay for transportation, housing, food, childcare and health care — a damning stat for one of the world’s most developed and wealthiest countries.

Self, along with other mission-driven fintechs, is trying to pave the way for financial wellness and create a financial sector that is more accessible and equitable.

Sharita’s Story

Sharita Humphrey learned of Self after her marriage ended and she was struggling to support two kids. She had no job and tarnished credit scores.

Humphrey referred to this period as her “rock bottom.”

“I just decided it was time for me to make a change in every area of my life – personally, financially, professionally,” said Humphrey. “I told my two children I just need 30 days; I’m going to figure this out.”

She started to take in as much information as she could on improving her life, and, in particular, her credit. During this search she came across Self.

Humphrey devoured all the information Self and other financial sites had to offer on establishing a strong payment history. And, within a few months, Humphrey had improved her credit and gotten a new job with the state of Texas as a financial auditor. She wouldn’t have received the position if she hadn’t fixed her credit score.

And after getting back on her feet, Humphrey took things a step further – she started her own financial literacy business based in Houston. Humphrey’s work has been featured in Forbes, Allbusiness.com and MSN.

She’s also now working with Self to help other consumers build their credit.

“Did I think this was going to happen? I was very doubtful,” said Humphrey of her success. “I didn’t know if I could succeed (as an entrepreneur) because I don’t come from a family where there are people who started and maintained a business. I’m a person who grew up in Houston’s inner city; my family didn’t talk about money, credit and wealth.”

Today, any doubts Humphrey had can be quashed. She recently moved into a new home and by 2020 hopes to help at least 500 people reach their financial goals.

“This is just the beginning,” said Humphrey.

Making an Impact

Some Self clients have had their credit score improve by 100 points,** according to Jackson. She added, however, that it’s important for prospective clients to understand their unique goals and needs before using the product.

“I love Self! First plan started in October 2016 and score improved 110 points over the course of a year,” said Self client Annette B. “Just started a new plan and excited to see the results. Definitely worth signing up for it. Overjoyed they now have an app!”

Borrowers don’t receive their money right away and need to be able to make monthly payments in order for the program to work, said Jackson.

But when the client is willing to put in the effort, like Humphrey was, it’s all worth it.

“One of the things I love about this place is that we have the mission of a nonprofit, but we combine it with the positive aspects of being a business,” Jackson said. “I’m excited and passionate to come to work every day and know that what I’m doing is having an impact on people’s lives.”

* Minus interest and fees

** Improvement in credit score is dependent on each person’s specific situation and financial behavior. Failure to make monthly minimum payments by the due date each month may result in delinquent payment reporting to credit bureaus, which may negatively impact your credit score.  The Self product will not remove negative credit history from a credit report.