KOHO Credit Building Feature Review for 2024

KOHO Credit Building could help you build a better credit score . It’s hard to live without access to some kind of credit. You might need a credit card to book a hotel or make online purchases. Overdraft protection on your bank account could be handy to cover expenses if you run short of income. Alternatively, you might need a loan to buy a car or want a line of credit available in case of a major expense.

Financial products have evolved significantly in recent years. Some companies now offer the option to build your credit without a credit card. KOHO is a Canadian company that provides a prepaid, credit-building line of credit. Here’s how it works:

Who is KOHO?

KOHO is a Canadian fintech company based in Toronto, Ontario. The company is not a bank but is backed by the People’s Trust . The account they offer is essentially a prepaid Mastercard. You deposit the funds to your card by eTransfer or by direct deposit.

You can use the funds for purchases, daily expenses, and bills. KOHO accounts have monthly service charges or fees ($4-$19 depending on your plan). Depending on your account, you could also be eligible for various perks, like cash back on purchases and premium interest rates.

KOHO works with Google Pay and Apple Pay, so you can easily access your funds. The prepaid Mastercard can be used anywhere Mastercard is accepted and at ATM machines. KOHO provides a convenient, accessible service for people who want to keep their finances simple and reduce fees.

Who could benefit from KOHO Credit Builder?

People starting out, new to Canada , or needing to rebuild a bad credit score will find it more difficult to borrow than someone with a good credit score and an established credit history. Unfortunately, it’s sometimes true that you can’t get credit without a credit history, but you can’t build a credit history without credit.

KOHO’s credit building feature

The credit building feature KOHO offers was introduced in 2021. The idea behind the product was to give users a simple and affordable way to build their credit.

KOHO’s credit building feature is an inexpensive, simple way to build your credit. First, you subscribe to the product, and KOHO sets up the product as a line of credit. Then, you make a payment each month for six months. These payments are reported to the credit bureau Equifax and will work to build your credit score. The product will auto-renew every six months if you don’t cancel it.

If you subscribe to the basic plan called Essential, Credit building costs $10/month. However, with the Extra plan, the fee is $7/month. If you subscribe to the Everything plan, you get a 50% discount, which means building your credit only costs $5/month.

How to qualify

Well, there’s really not much to it, which is why it’s a great product for many people. First, you need a KOHO account that’s been thoroughly verified, and you need enough money in the account to cover the $5 to $10 subscription fee. Then, KOHO will do a soft credit check on your credit report. A soft credit check means there is no impact on your credit score.

How it helps

Your $5 to $10 subscription fee is reported to the credit bureau as a credit payment. The credit bureau will update your credit report each month to show that you have made consistent, regular payments. On-time payments will either generate a credit score for you or boost an existing credit score.

Once you have completed the cycle of six months, you can decide if you want to continue using the product or not. One factor influencing a credit score is the length of time an account has been open.

For some people, it could be helpful to continue to use KOHOs credit building feature to develop a better score. Others will find that they will have gotten the maximum benefit out of it after six months, and there is no need to renew.

This article is the shortened version of an article originally published on Hardbacon.ca by Arthur Dubois under the title "KOHO Credit Building Feature Review for 2024".