Cred.ai Review: Build Credit Without Hard Pull, But Not Much Else
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Key Takeaways
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“A credit card spending experience.”
Those are words you don’t hear from Chase, American Express and Bank of America. And that’s intentional, because what cred.ai offers is different from the competition.
In this cred.ai review, I’ll simplify what the company offers, answer common questions, and help you decide if the new “credit card spending experience” they promise is good branding or a worthwhile product.
4.3/5How it works: cred.ai offers both a checking account and a credit card. You could choose just one product or the other, but they're not very good products individually , they're designed to work best together.
How it works is that you put money upfront into the checking account and can then make purchases with the associated credit card (the Unicorn Card). The amount you can spend is based on how much you add to your checking account. (You can also link an external bank account to increase your spending limit.)
Once you make a purchase, cred.ai will set aside funds from your checking account or linked bank account to pay off the balance. If you try to spend money you don’t have, cred.ai will decline the transaction.
This setup enables cred.ai to report an open revolving credit line to all three major credit bureaus, even though it acts more like a debit card (in that it prevents you from spending money you don’t have).
Who it’s for: cred.ai is a good card for people who want to build credit without the risk of going into debt (because it’s impossible to overspend on the card). It’s also a good short-term and safe path for those looking for a quick boost to their credit score.
However, because it offers very few features beyond credit reporting , there are no cash-back rewards or points , it’s not a good long-term option.
Alternative: If you're good at managing your spending, consider getting a secured credit card from a big bank instead. This type of card can be upgraded later, which lets you you grow your credit without needing to keep making cash deposits just to maintain your credit line.
Pros:- Prevents you from spending more than you can pay back.
- Reports both on-time payments and credit utilization rate.
- Can be used at over 55,000 ATMs for free.
- Guarantees you will never pay fees or interest.
- No hard credit pull required to apply.
- Card doesn’t offer cash-back or have a reward points program.
- No interest is earned on the cash held in your checking account.
- You need to keep using and funding the account to get credit benefits.
- There’s no option to upgrade for better rewards.
Table of Contents
Togglecred.ai Overview
If you’re brand new to what cred.ai offers, here’s a breakdown:
- cred.ai’s core offering is a combination of a credit card (called the Unicorn Card) and an FDIC-insured checking account.
- The spending limit on the Unicorn Card is set by how much money is in your cred.ai checking account, so the card acts more like a debit card than a traditional credit card.
- The amount of money you keep in your checking account, and whether you utilize direct deposit, determines the credit limit of the account that gets reported to the credit bureaus. Users report that the limit ranges from $500 to $1,500.
- So why not just call it a debit card? With this setup, credi.ai is able to report both on time payments and your credit utilization to all three major credit bureaus, the same as a traditional credit card does.
- cred.ai doesn’t wait until your payment due date to pay off the card. Instead, it uses the funds in your cred.ai checking account to pay down the balance throughout the month. As a result, cred.ai reports a very low credit utilization rate to the three credit reporting bureaus (users report having a 3% or less credit utilization rate). If the funds are not in your account, cred.ai will decline the transaction.
- You will never pay fees for the card, or any interest on balances owed. This isn’t because it’s a 0% APR card but because the way the card functions prevents you from spending more than you can pay back.
- There’s no minimum FICO score required to apply. There’s no hard pull either. You’ll be asked about your income.
- You can choose to sign up only for the Unicorn Card and not the bank account. In that case, the Unicorn Card acts like a traditional credit card, with some of the extra features we’ll mention below and an APR that will vary depending on your credit score. By itself, the card isn’t worth considering, as there are much better products available.
cred.ai FAQ
Before we get into cred.ai’s features, let’s answer some of the common questions about the cred.ai Unicorn Card and the cred.ai checking account.
cred.ai sounds like a secured credit card. What’s the difference?
Secured credit cards , where you deposit a certain amount of money onto the card, and then can spend up to that deposit amount , have been around for a while, and they help people build credit.
Along with some unique features of cred.ai that we’ll discuss below, some of the key differences between what cred.ai offers and secured credit cards are:
- You can spend up the utilization rate of a secured credit card, while that’s not possible with cred.ai.
- Numerous secured credit cards report very low credit limits (e.g., $500) while cred.ai will report up to $1,500.
- It’s still possible to miss payments with a secured credit, while cred.ai handles this for you.
We go into more detail about the differences later in the article.
Final Thoughts
The bottom line: a little research on cred review build credit goes a long way. Compare your options, watch for seasonal offers, and never pay full price when a better deal is one click away.
Originally published at thewaystowealth.com.
R.J. Weiss
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