SeedFi Review [2022]: Bad Credit Loans for Smart Borrowers?

SeedFi says it offers plans that help borrowers build credit, but do they work?
Last updated July 1, 2022 | By Lindsay Frankel | Edited By Melinda Sineriz
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Most people do their best to prepare for the future, but sometimes unexpected expenses can pop up and interfere with our plans. Expenses don’t even need to be catastrophic to throw your finances for a loop — 35% of Americans wouldn’t be able to cover an unexpected $400 bill in cash, according to the U.S. Federal Reserve. A car repair, medical bill, or home appliance breakdown could be enough to leave you short on funds.

SeedFi is a fintech company that specializes in products that could help borrowers build credit and savings. In this SeedFi review, find out whether a SeedFi loan or credit-builder account could help you improve your financial health.

In this SeedFi review

An overview of SeedFi

SeedFi is a financial services startup that was founded in 2019 and is based in San Francisco. It has a goal of giving everyday Americans with poor credit scores access to credit and credit-building opportunities. Each SeedFi product has a savings component so borrowers could potentially start building credit and an emergency fund.

SeedFi currently operates in 36 states and the District of Columbia. It works with banking partners Cross River Bank and Evolve to offer the savings accounts associated with its plans.

Which loan products does SeedFi offer?

SeedFi offers personal loans and credit lines. Personal loans are fixed-rate installment loans provided for a variety of purposes. That means they usually have the same interest rate throughout the loan term, and the loan term is set when you take out the loan.

Personal loans may come with lower interest rates than credit cards, but that depends on your creditworthiness. Some people may not qualify for a traditional, unsecured personal loan from a bank or online lender due to a spotty or limited credit history.

Unsecured loans are riskier for lenders because the borrower doesn’t put forth collateral for the lender to fall back on. For example, an auto loan is secured by your vehicle, and your lender can seize your vehicle if you default on your payments. But if you stop making payments on an unsecured personal loan, the lender has fewer options.

But although most personal loans are unsecured, some personal loans are secured by money in a savings account. These are often known as credit builder loans, and that’s the specific type of personal loan product that SeedFi offers.

SeedFi also offers a line of credit. This is similar to a credit card, in that there’s a maximum amount you can borrow, and you can use the credit again as you pay it off.

Credit Builder Prime at SeedFi

This SeedFi credit builder plan is designed for people who want to build credit and save money rather than those who need access to cash right away. You can open an account with no credit check, and you opt to pay a set amount each pay period (most people pay SeedFi twice per month based on their pay schedule) to build up an online savings account. You must pay at least $10 each pay period. If you’re self-employed or otherwise have a different pay schedule, SeedFi will work with you to find a suitable payment schedule.

Your savings are inaccessible until you reach $500. Each time you reach $500, you have access to that $500. For example, once you save $500, you have access to the full amount you’ve saved. If you continue to save and reach $800, you’ll still only have access to $500. Once you reach $1,000, you’ll have access to $1,000 because you’ve saved another $500.

Here’s how it works behind the scenes: When you sign up for Credit Builder Prime, SeedFi opens two savings accounts with its banking partner. One account is “locked” and one is “unlocked.” It also opens a $1,000 line of credit in your name. You declare to SeedFi the amount you want to pay each pay period.

Each pay period, SeedFi charges the amount you declared to your line of credit and deposits that amount into your locked savings account. You pay off the line of credit with your scheduled payment. Each time you reach $500, the $500 is moved from your locked account to your unlocked account.

SeedFi will report your payments to the three major credit bureaus, which may help improve your score. The lender reports an average VantageScore increase of 45 points for customers who made on-time payments for six months and had fewer than three tradelines on their credit profile. It also cautions borrowers that it can’t guarantee any specific results regarding their credit score.

Line of credit amount $1,000
Loan term N/A
APR N/A
Credit needed Any

Borrow & Grow Plan at SeedFi

The Borrow & Grow plan is designed for people who have an immediate expense they need help with, but it also helps borrowers build savings for the future. You could borrow up to $7,000 if you qualify, with up to $4,000 accessible immediately. The balance is deposited into a locked savings account, which you could unlock once you repaid the loan in full.

Here’s an example: Let’s say you need $2,000 ASAP. You apply for the Borrow & Grow Plan at SeedFi and you’re approved for a $4,000 loan. $2,000 is deposited into your checking account and $2,000 is deposited into your locked savings account. You’ll repay SeedFi every two weeks (when you’re paid). Once you repay the $4,000 plus interest, you’ll also have access to the $2,000 in your savings account.

With this plan, SeedFi does check your credit. To qualify for this product, you need to be 18 and have at least $10,000 in annual net (after-tax) income. You’ll also need to provide your Social Security number or taxpayer identification number and have a phone that can receive texts.

It also reports your payments to the credit bureaus, which could improve your credit score depending on your overall financial picture. SeedFi doesn’t specify how the money can be used, so you’re free to use it for any purpose.

Loan amount $1,200 to $7,000 ($300 to $4,000 is accessible immediately)
Loan term 8 to 47 months
APR 11.59% to 29.99% (as of July 1, 2022)
Credit needed Not specified

What SeedFi customers are saying

SeedFi has an A+ rating with the Better Business Bureau. Customer service reviews on third-party review site Trustpilot are also excellent. SeedFi received an average rating of 4.8/5 stars from more than 1,600 customers. People say that customer service thoroughly explains the products and the loans are quick. Most people who left bad reviews either were unhappy with the process of canceling a loan or did not like how the product worked.

FAQs about SeedFi

Is SeedFi legit?

Yes, SeedFi is legit. SeedFi is licensed as a lender and a debt collection agency in states that require such licensure. It’s also Better Business Bureau-accredited.

What bureaus does SeedFi report to?

SeedFi reports your on-time payments to all three consumer credit bureaus: TransUnion, Equifax, and Experian. SeedFi reports your payment history at the end of each month.

What is a credit builder loan?

A credit-builder loan is a secured personal loan. The features vary by lender, but borrowers are typically required to repay the loan in full before they can access the funds, which are typically locked away in a savings account. The Consumer Financial Protection Bureau reports that these products can be helpful in establishing and building credit.

The final word on SeedFi

Thinking about how to get a loan? One of the most important factors is your credit. SeedFi may not be the best option for borrowers with excellent credit, as they could find better interest rates and longer loan terms elsewhere, or those who need immediate access to a large loan, as the most you can access immediately is $4,000. But it could be a useful tool for people who want to build credit, access a relatively low loan amount, and grow their savings.

If the options at SeedFi.com don’t seem right for you, check out our list of the best personal loans for alternatives.

Disclaimer: All rates and fees are accurate as of July 1, 2022.

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Author Details

Lindsay Frankel Lindsay Frankel is a Denver-based freelance writer who specializes in credit cards, travel, budgeting/saving, and shopping. She has been featured in several finance publications, including LendingTree. When she's not writing, you can find her enjoying the great outdoors, playing music, or cuddling with her rescue pup.