There are a lot of products to help you improve your credit score. Secured credit cards. Reporting rental payments to credit bureaus. And of course, credit builder accounts.

Perhaps you’ve heard of some specific credit builder products. Capital One & Discover are well known for their secured credit cards. RentTrack reports your monthly rental payments to all three credit bureaus. Self Inc. offers credit builder accounts.

To this long list, we would like to add another product: Kikoff. Kikoff is a free credit builder product, which is making waves in the financial technology world. 

Perhaps you’ve heard of it? Either way, we figured we would share our thoughts about Kikoff – and whether it makes sense for you. Please note that we have recieved no compensation from Kikoff, for sharing our thoughts here.     

Kikoff: An Overview

Kikoff claims to help you “build credit for free.” That claim appears to be true. 

Kikoff sets aside $12 for you, in a “digital wallet”, which is an account created by Kikoff. You then make payments of $1 each month, from your digital wallet. If you wish, you can withdraw the $12 from your digital wallet, and have it sent to your bank account, or sent to you by check.

Kikoff is not charging any additional fees. They give you $12, and then you repay the $12. Kikoff says that they’re a mission-driven company, whose goal is to help individuals achieve stronger credit scores. In the future, Kikoff might display loan products, offered by it’s partners, and earn money from commissions.

Kikoff reports your monthly payments (of $1) to Experian and Equifax. That’s 2 of the major three credit bureaus. Kikoff says that they report your payments to TransUnion only if you’re “new to credit.” 

How Kikoff Can Benefit Your Credit Score 

Essentially, what Kikoff is doing, is placing a loan on your credit reports – in the amount of $12. Remember, they gave you $12, which you’re now repaying, every single month. 

Most credit scoring decisions are made with the use of the FICO credit scoring formula. Whether you’re applying for an apartment rental, mortgage, auto loan or credit card, there’s a good chance your FICO score will be used.

For this reason, it’s important to understand how FICO scoring works. The biggest factor in calculating your FICO score is your payment history – i.e. whether you pay your credit accounts on time. Payment history counts for 35% of your FICO score.

By paying your Kikoff accounts on or before the due date, every single month, you’re adding more on-time payments to your credit reports. This allows you to enjoy a stronger payment history, which further boosts your FICO score.

Kikoff also helps your mix of credit. If you refer back to the chart above, you’ll see that your credit mix accounts for 15% of your FICO score. 

What this means is that having different types of credit accounts, is better for your FICO score. So, if you have a loan and a credit card, that’s better than just having a credit card. Kikoff helps by adding a loan to your credit reports – for free. 

We would still suggest opening a credit card – perhaps a secured credit card, if you’re new to credit, or have poor credit. Still, Kikoff is very helpful, because it adds a loan.

Downsides of Kikoff 

There are very few drawbacks to Kikoff. It is free, it is easy, and it seems to work. The only thing we don’t really like is that Kikoff only reports to TransUnion if you’re new to credit. If they always reported to TransUnion, that would be ideal. 

However, in life, we often can’t get everything we want. Overall, Kikoff offers many excellent benefits.

Alternatives to Kikoff 

When it comes to credit builder accounts, Kikoff isn’t the only game in town. Self Inc and Credit Strong are both competitors. Let’s take a look at how each of these products works.

Self Inc

 Self Inc (formerly Self Lender) offers an excellent credit builder product. Self Inc sets aside money (a minimum of $600), in a savings account, which you initially don’t have access to. 

You make payments, typically over a period of 24 months, towards what was set aside in the account. Payments will be for $25 a month. 

These payments are reported to the credit bureaus, every single month. The account is listed as a loan. Assuming you pay on time, your credit score will benefit.

At the end of the 24 months, the money you paid is returned to you, minus interest and fees. Typically, you’ll get back around $520, after paying a total of $600. This means you’ve paid $80 in interest and fees – vs. $0 for Kikoff. So, in many ways, Kikoff is a better choice.

Yet, Self Inc does have two notable advantages over Kikoff. Self Inc offers a credit card, if you’ve made at least $100 in payments towards Self. The credit card is with Visa, and will report spending and payments to the credit bureaus every month. 

If you’re new to credit, or struggling with damaged credit, a card with Visa might be an excellent option for you. If you went with a traditional secured credit card (such as Capital One or Discover), you would usually have to provide a deposit of up to $200. Self Inc makes it possible to open a card without spending money.

Second, Self accounts are for a 2 year payment term. This means that for 2 years, your positive payment history is being reported to all three credit bureaus. Kikoff accounts last only one year. Keep in mind that the more on-time payments you have, the better your FICO score is. 

Credit Strong

Credit Strong is, in many ways, quite similar to the credit builder product offered by Self Inc. Credit Strong offers two credit builder products. One charges just $15 a month, and offers a $1,000 account (which appears on your credit reports). The other account is for $30 per month, and it provides a $2500 account. 

Both of these accounts offer terms of up to 10 years, and charge interest (although the rates seem to be lower than Self Inc). Credit Strong reports your payment history to all three credit bureaus.

Credit Strong is cheaper than Self, and has somewhat lower interest rates. Also, since Credit Strong offers loan terms of up to 10 years, it allows you to build on-timer payments, for a longer period of time. 

Like Kikoff, Credit Strong does not offer a credit card – which is a notable advantage of Self Inc. Of course, Kikoff does not charge any interest, which is perhaps it’s biggest draw, as compared to Credit Strong or Self Inc. As always, there are tradeoffs.

The Final Word

Overall, we think that Kikoff is quite a solid product. It lets you build better credit, simply and free of charge. There’s almost no reason not to use Kikoff, if you’re looking to improve your credit. 

Of course, Kikoff isn’t the only tool you should use, to boost your credit. You should consider secured credit cards, reporting rent, and credit repair (if you have negative items on your credit reports). By taking this balance strategy, you’ll be able to consistently improve your credit scores, and enjoy a brighter financial future.