KOHO Credit Building Review

**This post may contain affiliate links. I may be compensated if you use them.

I love KOHO. It’s easily the best prepaid credit card in Canada, but one major thing working against it is the fact that you don’t build any credit while using the card. Well, that’s no longer an issue since KOHO recently introduced a credit building feature.

To be clear, the credit building feature is optional. It’s a stress free credit building tool to help boost your credit score by simply paying a monthly fee of $10 over a 6-month program. You can opt back in as many times as you like after the initial 6 months to keep building your credit.

$42 for six months may not sound like a good deal to some. But it can be quite effective for people who are looking to improve their credit score. Here’s why.

How KOHO Credit Building works

Think of KOHO’s credit building feature as a no-nonsense way to build your credit. As long as you have $10 in your spending account every month, KOHO will report your payments to Transunion. If you didn’t know, Transunion is one of the credit reporting agencies in Canada. Equifax is the other.

Technically speaking, this tool gives you access to a loan, but it’s not available by default. You have to request it. KOHO does this on purpose because they don’t want you to use the money.

The $10 is automatically withdrawn from your spending account each month. As long as you have $10 in your account (not in Vault), KOHO will report to Transunion that you’ve paid on time. Over the period of 6 months, you’ll likely see a slow increase in your credit score.

When you apply, there’s no hard check against your credit score. In addition, you’ll be able to check your credit score directly in the app after every payment is taken, so it really doesn’t hurt you.

Is it possible that my credit score will decrease?

Even if you always pay the $10 monthly fee, it’s still possible that your credit score could decrease. KOHO’s credit building service is just one product that reports your credit history. Let’s say you have other obligations such as credit cards or car payments. Depending on your payment history, your credit score could be affected negatively by them.

Assuming you’re paying everything on time, in full, and you’re not taking on additional debt, then your credit score should increase over time. It’s important to note that your credit score won’t skyrocket instantly or by a huge amount. These things take time, so even a 1-10 point improvement in your credit score should be considered a positive.

The key thing is to ensure you’re not missing any payments. You just need to make sure you have at least $10 in your KOHO spending account and you’ll be in good shape. 

How to apply for KOHO Credit Building

If you’re currently a KOHO user with a fully verified account and have at least $10 in your account, you can apply for the credit building feature. To get started, just follow these steps:

  • Open your KOHO app
  • Click Tools
  • Select Credit Building
  • Tap Register and start building your credit

Who is KOHO Credit Building for?

KOHO Credit Building is good for anyone who’s looking to improve their credit at a low cost. Most people who are looking to rebuild or improve their credit score usually have limited choices. In many cases, their only option is a secured credit card. Secured cards are great, but if they’re the only product you have that’s reporting to the credit bureaus, then it may take some time for your credit score to improve.

There are other companies that offer credit building loans, but the fees and interest rates can add up quickly. With KOHO, you only need to worry about the monthly fee.

By adding KOHO Credit Building, you’re essentially having another company vouch for your improved credit use. Paying $42 for some small improvements can definitely go a long way. Once your credit score is in good standing, you can stop the service.

Final thoughts

Although it’s not free, KOHO’s credit building tool is definitely helpful. Way too often you’ll find services online that claim they’ll be able to repair your credit score overnight for a flat fee. That’s just not possible and is 100% a scam. KOHO is a proven Canadian brand that has encouraged financial empowerment since they arrived on the scene. If you’re new to KOHO, sign up with my referral code CASHMONEY now to earn an extra 1% in cash back for 90 days.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

1 Comment

  1. Paul on August 18, 2021 at 6:11 AM

    Been testing this out, my credit has gone up by 68 so far.

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