Self Lender Review: How to Improve Your Credit Score by Saving Money

What’s the single most important number when it comes to personal finance? I would argue that it’s not your net worth or income level, but your credit score.

This mystic number influences how much you can borrow, your interest rates, and sometimes even your job opportunities. In short, a great credit score is worth hundreds of thousands of dollars, while a lousy score can cost you a nice home, new business, and a plethora of other opportunities.

But what do you do if your credit score is bad, or even nonexistent? Well, you have several options to improve your credit score – one of my favorites is by setting up an account with Self Lender – a platform that helps you improve your credit score while saving for your future.

Self Lender Front Page

But before we talk more about Self Lender, let’s discuss credit scores in general.

Why a great credit score is worth thousands of dollars

Having an excellent credit score has profound financial benefits. In fact, as the Self Lender calculator shows, a bad credit score results in ridiculously high interest rates on everything from your mortgage to your auto loan:

Self Lender Bad Credit

Meanwhile, maintaining a great credit score is worth over half a million dollars during a 30 year period! That’s more than many Americans have saved up for retirement!

Self Lender Great Credit

For digital nomads, maintaining a great credit score is even more important. Why? Because a great credit score gives you access to credit cards with high rewards and bonuses (saving you thousands on travel), better interest rates on business loans, and stability when applying for housing, as you may not have proof of income available.

How your credit score gets calculated

Your credit score (also known as your FICO score) is calculated based on five weighted criteria, according to Investopedia:

  • Payment history (35%) – improved by paying your bills on time.
  • Amount owed (30%) – the less you owe, based on your total ability to borrow, the better your score will be.
  • Length of credit history (15%) – the longer your credit history, the better your score.
  • New credit (10%) – occasionally opening up good credit accounts can continue to benefit your score, but too many new accounts has a negative impact.
  • Type of credit used (10%) – having a variety of credit types (credit cards, mortgages, loans, etc.) will show that you can manage a variety of financial situations, resulting in a higher score.

By improving each of these categories over time, your overall credit score will increase.

How to improve your credit score when it’s bad

Knowing that payment history accounts for 35% of your credit score, it’s logical that the most effective way to improve your credit is to make consistent on-time payments, over time.

However, the moment you’re late on a payment, your credit score may take a significant hit! When taking on a new debt, always be careful, as a mistake could leave you with a worse credit score than with which you started.

Using credit cards and personal loans are two ways that are often touted to improve a bad credit score. The less talked about negative side to these options is the inherent risk they carry. If you fail to pay the credit card or the loan back, you can completely ruin your credit score!

Enter Self Lender….

My Self Lender review:  How to improve your credit score by saving money

Join Self Lender

After signing up for a free Self Lender account, you can take out an $1,100 loan. But unlike a traditional loan, Self Lender deposits this $1,100 directly into an FDIC-insured 1-year CD account.

What does that mean? Instead of receiving $1,100 that you may accidentally spend on a bad purchase, the money is invested for you at an interest rate of 0.1%.

Then, you make monthly payments of $97 for one year on the 12.65% APR loan. Provided you make these payments on time, your credit improves due to the consistent payments, new form of credit, and extended credit history.

At the end of the 12 months, your loan is repaid and you receive the $1,101.10 from the CD!

Instead of borrowing money you don’t have, Self Lender let’s you borrow towards future savings! Provided you can cash out of the loan early if needed (although not recommended) this tool prevents you from getting stuck with debt you can’t afford to pay off.

How Self Lender Works

Now, if you’re good at math, you’ll notice that this loan still costs you money. Between the interest rate and the initial $12 loan origination fee, the Self Lender loan costs about $75 for the entire year.

    • Payments: $97 x 12 = $1164
    • Loan origination fee: $12
    • CD value received after 12 months: $1,101.10
    • Total cost of the loan after one year: $74.90

Because of the cost, if your credit score is already well above 720, you’re probably better off avoiding any type of loans and manage your stable investments through tools like Betterment.

However, if you want to improve your credit (or help you kid improve theirs), Self Lender is probably the safest and most affordable way to do that.

The two primary benefits I see with Self Lender are:

  1. You improve your credit score without the risks associated with a traditional loan.
  2. You force yourself to save – and have access to an additional $1,101.10 after the loan is paid back.

Considering an excellent credit score can save you thousands on a single car or student loan, if you or someone you know has bad credit, I highly recommend the Self Lender loan.

My experience taking out a Self Lender loan

Thanks largely to financial education from my parents, and my dad adding me to one of his credit cards as a teen, my credit score has always been high.

However, my score has recently taken a slight dip because we applied for a new apartment in Orlando (where my wife will be attending grad school) and I just signed up for two new credit cards (to make the most of our summer travels). So, while my credit score was 786 in March, it has dipped to 749.

Although it’s still above the 720 score that is often considered excellent, having it above 750 is idea. Additionally, while my credit score has hit the 790s mark, it’s never crossed into 800!

Therefore, I decided to give Self Lender a try and see how it might affect my credit score in 12 months.

First, I took a look at their financial terms so I would fully understand what I was getting myself into:

Self Lender Financial Terms

Next, I took a look at the benefits that they stated as part of their service:

Why Self Lender

Considering that they offer free credit monitoring even with a free Self Lender account (and no loan), it’s not a bad idea to sign up just for that.

After my account was created and confirmed, it was time to go ahead and take out the loan! And as I moved forward this question came up:

Self Lender Gives You To Loan Options

If you click on the “I just need a regular loan today” they’ll recommend you to a different loan company and, if you take out a loan with one of those services, you’re in the same boat as you would be with any other loan – so don’t do that.

Instead, click “I want to build credit and savings” so that you can begin the process of applying for a Self Lender loan.

As with any application for a debt tool, they will check your credit score and ask you a variety of personal questions to confirm your identity:

Self Lender Identity Questionaire

Then, after answering all of the questions and providing the necessary information, hopefully you receive the same celebration that I did!

Self Lender Loan Created

With the confetti all over the screen I felt like I had just won the lottery (which is, unfortunately, not the case – although this is still a better investment than buying lottery tickets).

Once the loan was confirmed I made my first month’s payment of $97 and scheduled the rest of the payments for automatic withdrawal from my bank account (I don’t want to be late on any of these!).

From here, I was able to see my dashboard which shows me how I’m doing and allows me to view my credit score anytime!

My plan is to check back periodically and see how my credit score changes with these consistent payments. Although my other financial decisions will definitely influence the score as well, I’m crossing my fingers in hopes of finally crossing that 800 mark! We’ll see.

Drawbacks to using Self Lender

Now, no review would be complete without mentioning the obvious drawbacks or negative elements of a product.

Although I’m not as adamantly against debt as some people are, I still believe that the only debt you should ever have is for a house, education, or business (provided you are smart with this debt). It’s never a good idea to take out a loan for a vacation, wedding, or other temporary pleasure.

Because Self Lender doesn’t give you direct access to a personal loan, I think it can actually be helpful – for the right person, at the right time in life.

The biggest drawback is that it ties up $1,100 for 12 months and costs you $75. Meanwhile, if you invested that $1,100 through something like Fundrise’s 10% eREIT, you would actually make $110 during that same time period. Therefore, when opportunity cost is accounted for, the loan actually costs you $185.

Therefore, if you already have a great credit score, Self Lender probably isn’t worth it (unless you’re like me and enjoy trying anything and everything). However, if your credit score is under 700, the improvement could easily be worth thousands of dollars, making it a worthwhile investment.

If you’re looking for a secure way to improve your credit score, a Self Lender loan may be right for you.

I’ll update this blog post as I track my own progress and who knows, maybe I’ll cross that 800 mark!

For the comments: What are your thoughts on debt and credit scores? How would you recommend that people intelligently improve their credit scores?

After expressing an interest in trying Self Lender, it was great to have their team agree to partner with me on this sponsored post. The views and opinions are all mine and I always enjoy working with great brands that help me provide value to the Money Nomad community. Thanks for reading!


Rob is enthusiastic about everything related to money and investing. A financial analyst and instructor, he enjoys using what he’s learned from 10 years of studying business and money to help others achieve financial stability. He founded Money Nomad in 2014!

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  1. Hi Rob,
    I am curious if the Self Lender Loan was worthwhile? Was there a significant impact on your score?
    Look forward to your update!

    1. Thanks for commenting Jim! It definitely did improve my credit score — and it helped me easily monitor the process of applying for a few new credit cards and even getting pre-approved for a home loan. So I need to update this article soon here. I appreciate the reminder!

    1. I definitely saw a bit of an improvement throughout the year — even though I pulled out several credit cards in the process. So it’s a solid product! However, I met with someone from Experian who told me these kind of services won’t always have a massive impact on your credit. But still worth trying if you need to improve.

      Currently I am not aware of any other service that does this. But if you find one, let me know!

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