Both Borrowell and KOHO offer rent reporting services to help you boost your credit. Which one is right for you?
Colin Graves
Oct 02, 2025
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Building up your credit score can feel challenging, especially if you have a short credit history or have had some negative financial incidents in the past. Fortunately, credit builder loans can help. Credit builder loans can act as a valuable tool to help you establish or improve your credit score. Here, we explain Canada's best credit builder loans, including their benefits, drawbacks and alternatives.
Borrowell's Credit Builder is an instalment loan that allows you to start building your credit for only $5, $15 or $25 biweekly over 48 months. During this time, Borrowell reports your payments to Equifax Canada (one of the two consumer credit bureau in Canada). If you make consistent payments and ensure that you are financially responsible with this and any other credit you have outside of this loan, your credit score should improve with time.
Interest rate: N/A
Loan Term: 48 months
Eligibility: There are a few criteria for applicants:
Must be a Canadian citizen or permanent resident
Must be at or above the age of majority in your province
Must live in Canada, excluding Saskatchewan
This program is straightforward to use: you select the bi-weekly payment that works with your budget. Then, focus on making consistent, on-time payments to improve your credit score. A higher credit score can make it easier to qualify for loans and credit in the future. In addition to helping you build your credit history, Borrowell's Credit Builder also offers the following benefits:
Guaranteed approval
No hard credit check when you apply
No interest, just a flat program fee
Pre-authorized debit payments
Access to exclusive credit education and cash back rewards
Ability to cancel any time without financial penalty
Currently, this program is unavailable in Saskatchewan, so you’ll have to consider other options if you live in that province.
Sign up for Borrowell to get your free credit score. That's right. For free.
KOHO's credit builder tool is a line of credit that can help you establish and improve your credit score. To sign up, you need to have an existing KOHO account with enough money in your account to cover the subscription fee. From there, you pay a subscription fee of $5, $7 or $10 a month, depending on the account type, to get access to $225. Every month, you have to choose a credit utilization rate using the KOHO app, and KOHO reports your payments to Equifax.
For example, if you use $22.50 of your $225 available credit, your credit utilization rate is 10%. Every month, on your billing date, your credit utilization rate resets to 0%. You will need to reset it yourself in the app, and KOHO reports this activity to Equifax.
Interest rate: N/A
Loan Term: N/A
Maximum loan amount: $225
Eligibility: No application – guaranteed approval
The most significant benefit to this program is that you can build up your credit score for a relatively low cost. Additional benefits of KOHO include:
Guaranteed approval regardless of credit score
No hard credit check
Free access to credit score
No interest charges; only a monthly subscription fee
Access to financial coaching
Cancel your subscription at any time
KOHO Credit Building provides a lower credit limit than some other credit building options. To use KOHO's credit building services, you have to have a KOHO account. If you don't want to become a KOHO customer, you’ll have to look elsewhere.
If you want to shop around and check out various lenders, looking at what different credit unions can offer you is a good idea. Typically, you have to become a credit union member, and then you can get loan details based on your situation and the credit union’s policies. You can start looking for a credit-building loan from a credit union on Loans Canada and LoansConnect, two platforms that allow you to research and compare loans from various lenders.
Interest rate: Varies
Loan Term: Varies
Maximum loan amount: Varies
Eligibility: Varies
You may be able to find a credit union that offers payments and terms that work well with your budget and timeline.
You’ll have to become a member of that credit union, and many credit unions are co-operatives, so you would need to meet specific eligibility criteria to become a member. Some credit unions offer less advanced online banking tools than what you would get from Borrowell or KOHO. Depending on the credit union, you may be charged additional fees and interest costs.
There are a few reasons why you might need a credit builder loan. Reasons include:
You're a newcomer to Canada, a student, or you've never taken out a loan before and you don’t have a long enough credit history.
You have a low credit score because of a history of missed or late payments.
Whatever the reason, a credit builder loan helps establish or rebuild your credit by reporting your payments to a credit bureau.
A credit builder loan is designed to help you build or improve your credit score. Unlike traditional loans, you don’t get the money upfront. Instead, the money is held in a savings account or certificate of deposit (CD) while you make payments on the loan. Once you have completed all the payments, the funds are released to you, sometimes along with any interest that has accrued.
Credit building programs work by helping you establish or improve your credit history. These programs usually involve taking out a credit builder loan, making on-time payments and monitoring your credit score. Some programs also offer credit counselling and financial education to help you manage your finances more effectively in the future, but if your program doesn’t, it might be worth seeking out that help elsewhere.
To apply for a credit builder loan, you typically need to provide proof of income, a valid ID and a Social Insurance Number (SIN). You may also be required to provide additional documentation, such as bank statements or proof of employment. Some lenders may also require a deposit, which will be held in a savings account or CD until you have made all the payments on the loan.
The length of time it takes to improve your credit score with a credit builder loan depends on several factors, including your current credit score, the amount of the loan, and the length of the repayment term. However, very generally, it can take six to 12 months to see a significant improvement in your credit score.
If you have a limited credit history or a low credit score, you should consider getting a credit builder loan well before you want to apply for a traditional loan, since it can take a minimum of six to 12 months to see a change in your credit score. By establishing a history of on-time payments, a credit builder loan can help you qualify for better rates and terms if you plan to apply for a mortgage, car loan or another type of loan.
Like most financial products, credit builder loans come with benefits and drawbacks. One disadvantage of obtaining a credit builder loan is that you will not have access to the funds until you have made all the payments. Additionally, some credit builder loans may come with high interest rates or fees, making them more expensive than other types of loans. Finally, if you miss a payment or default on the loan, it can negatively impact your credit score.
While credit builder loans can be a useful tool for improving your credit score, there are other options to consider. One option is to get a secured credit card. With a secured credit card, you make a cash deposit upfront that acts as collateral for any purchases you make with your card. You then use the card and make regular payments, which are reported to the credit bureaus, and this can help you establish a positive payment history.
Another option is to become an authorized user on someone else's credit card. This can allow you to benefit from the primary cardholder's positive payment history and improve your credit score. Whatever you choose, make sure you make on-time payments and keep your debt-to-credit ratio low.
In Canada, credit scores range from 300 to 900. While lenders might have different requirements, most consider a good credit score to be 660 or higher, which aligns with Equifax's credit score bands. This score demonstrates that you have a positive credit history and are a low-risk borrower, making it easier to qualify for loans and credit products.
The credit score you need to obtain a mortgage will vary depending on the lender and the type of mortgage you are applying for. In general, most lenders will want to see a credit score of at least 680. If your credit score is lower than this, you may still be able to qualify for a mortgage, but that might mean you need to pay a higher interest rate or provide a larger down payment.
The credit score needed to obtain a car loan or lease depends on the lender. However, most lenders prefer a credit score of at least 660. If your credit score is lower than this, you may still be able to obtain a car loan or lease, but you may need to pay a higher interest rate or provide a larger down payment.
If you want to improve your credit score, you have several options, including credit builder loans. These loans can be a valuable tool for establishing a positive payment history and improving your credit score over time. However, they are not your only option. You can also consider secured credit cards, becoming an authorized user, and other credit-building strategies.
By managing your credit responsibly and making on-time payments, you can work towards improving your credit score, giving you better access to financial products and terms.
Both Borrowell and KOHO offer rent reporting services to help you boost your credit. Which one is right for you?
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Oct 02, 2025
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