How Does Chime Credit Builder Work

Chime is an online money transfer platform that allows users to deposit and spend their money. It gives account holders an online banking experience upon opening a checking account. The platform operates in the US, and although it is not a real bank, users can spend and save money as they can with traditional banks. Today, I will discuss the Chime credit builder that helps people increase their creditworthiness. So, how does chime credit builder work?

You will learn more about the credit building card from the institution later on. When talking about a credit builder card, we refer to a credit card. A credit card is a payment card that allows you to borrow funds from your card issuer. When you borrow money from the card issuer, they usually report your card usage to the credit bureaus, who then keep the records for use by other financial institutions.

Chime partners with two banks to offer its checking and savings accounts. Even though it is not an actual bank like the traditional banks, its accounts have FDIC insurance and thus are safe to keep your funds. Furthermore, online usage places the institution in a higher position as you need a smartphone or tablet to manage your account on the go. Chime also allows you to open and manage your money on a computer.

How to get started with Chime?

To get started with Chime, you have to open an online account. You can open an account using a smartphone, tablet, or computer, as I mentioned earlier. You only need to have an active email address that you should start with when applying. Just visit the Chime website and scroll to the bottom to see the option to enter your email and hit “Get Started.” After that, you will pass the security check to prove that you are a human, then proceed to input your first and last names and your email address and continue.

A new page will open, requiring you to enter your date of birth. Enter it and press Next. After that, enter your mobile number and press Next. After that, enter your street address. A street address shows where you live. Enter the apartment, ZIP code, City, and State, then press Next. Complete the other steps to finish your application. Once your account runs, you can apply and get approved for a credit card with no credit. The Chime credit card does not require hard inquiry, and no annual fees are charged on the card.

How the Chime credit builder card works?

how does chime credit builder work

You can get the Chime Credit Builder Secured Visa® Credit Card and build your scores to qualify for loans. The card helps you increase your scores by an average of 30 points. As I have just mentioned, the card requires no hard inquiry, no interest, and no annual fee to apply. Furthermore, no minimum security deposit is required. If you are already a Chime member, you can sign in to your account and go straight to applying for the card.

If you do not have an account with Chime, you will have to open one and apply for the card. Once you get it, you start using the card for everyday purchases everywhere Visa is acceptable and make on-time payments. Chime then reports to all the three credit bureaus (Equifax, Experian, and TransUnion) to help you build scores over time.

But how much will a secured credit card raise my score? As I have mentioned above, you can increase your points by an average of 30 points with the Chime Credit Builder Secured Visa® Credit Card. 

Generally, if you want to see a rapid increase in your scores, you must pay your debts on time and utilize at most 30% of your borrowing limit.

How does Chime Credit builder work?

Once you open an online account, the next thing is utilizing your account for various transactions. You can run your account using the Chime App that you can get either from the App Store or Google Play. You can open a checking (Chime Spending Account) or savings account (Chime High Yield Savings).

i) Chime Spending Account

The Chime Spending Account allows you to keep the money for your everyday use. It has no monthly fees nor minimum balance requirement. Opening the account is free of charge, and you can get a debit card to help you spend money in your account. The platform has over 60,000 fee-free ATMs across the country, and thus it is not a must you use your online bank. The card also allows one to make purchases in various places in the country. You can even use your card abroad without any worry since Chime does not charge fees when using your card abroad either.

However, if you use the debit card at out-of-network ATMs, Chime charges you $2.50 per transaction. The platform allows you to deposit money from other banks or at deposit partner locations such as 7-Eleven, Walgreens, and Walmart. Reloading at Walgreens is free. You can also add money via mobile check deposit or direct deposit. The mobile check deposit requires you to have signed the direct deposit.

ii) Chime High Yield Savings account

A Chime High Yield Savings account allows you to keep money aside for future use while you earn some interest. The account has an APY of 0.50% and requires a $0.01 minimum balance. You must have the Chime Spending Account before opening the savings account.

Does Chime offer an unsecured credit card?

Chime only offers the Chime Credit Builder Secured Visa® Credit Card, a secured card to help you build your credit. Therefore, you cannot get an unsecured one with Chime. But what is the difference between a secured and unsecured credit card?

Well, the difference between unsecured and secured credit cards is that secured ones require you to deposit some amounts of money to act as a security deposit that you borrow against. If you cannot repay your debt, then the issuer can use the deposit to repay your debt. On the other hand, unsecured ones do not require any security deposit. You only need to have a borrowing history to get one.

Different unsecured credit cards require different credit scores to get them. We have bad, fair, good, and excellent score credit cards. Good and excellent score ones have lower interest rates and higher limits.

Why should you choose the Chime Credit Builder Secured Visa® Credit Card?

Various things make the Chime secured credit card a good option to build credit. They include the following.

1) The card does not require a hard inquiry

Since it is a secured one, it does not require scores. Remember that it is for building credit, and anyone, even those who have never taken any loan in their lifetime, can apply. Therefore, you can apply for the card if you have bad or no scores.

2) Chime does not charge fees to apply for the card

Some cards may charge application fees that you have to pay before getting the card. Chime does not do so. Even when opening your account, you do not pay any given fees.

3) No interest rate on the card

The card having no interest rate is very impressive. You only need to deposit the security amount and pay only what you borrow. Most secured credit card issuers require you to pay a security deposit, but that is not the case with Chime.

4) No minimum deposit is required

While most cards require you to make a minimum-security deposit, Chime allows you to deposit what you think suits you. But you need to remember that the higher the deposit, the more you have to spend.

5) The card helps you to build credit

As I mentioned earlier, the Chime Credit Builder Secured Visa® Credit Card helps you grow scores as it reports to credit bureaus. That means you can qualify for loans after gaining substantial scores.

How long will it take to build credit scores with a secured credit card?

The question, how long does one take to build credit with a secured credit card usually is common in forums discussing credit cards. You need to understand that no specific time is required to build credit. It all depends on your card usage. Some practices hasten the growth of your scores while others slow the process. As I mentioned earlier, you need to maintain a credit utilization ratio of at most 30% and make timely payments of your loan.

Late payment and defaulting are the significant reasons most people get poor credit scores. It shows how irresponsible you are, and most financial companies will fear giving you loans and lines of credit because of the risk associated with your repayment behavior. In most cases, you will realise score increment within 6 months of using a credit builder card.

Bottom line

Chime is a financial technology company that allows you to deposit and manage your money online. It operates in the US, and you can get a credit card to build your credit history. Chime offers both savings and checking accounts which are free to open. The savings account is a high-yielding one that allows you to earn high-interest rates. You have to open a checking account before opening a savings account.