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Flexible Credit Building
How does Flexible Credit Building work?
How does Flexible Credit Building work?
Colin avatar
Written by Colin
Updated yesterday

What is Flexible Credit Building?

KOHO’s Flexible Credit Building gives you the ability to build your credit history with your own funds! Think of it as a savings account that can help you build your credit. Here’s how it works:

  1. Make a deposit of $30-$500 into the account.

  2. Spend the funds from the account (we recommend nothing more than 10% of your deposit!)

  3. Replenish the amount you spent.

  4. Build your credit!

Just make sure you have enough funds in your Spendable for us to take back what you withdrew and we will report the activity to Equifax.

How do I register?

To opt into this feature just have the subscription fee and deposit ready! To opt in:

  1. Open the KOHO app

  2. Tap the Credit button (bottom right), then tap Flexible Credit Building.

How much can I choose to deposit?

You can deposit anywhere from $30 - $500.

How do I withdraw funds from my Flexible Credit Building?

Head to the Flexible Credit Building page in-app - it's just under your Spendable balance in the main screen, or from the Credit menu.

Select the amount you wish to withdraw using the slider (we recommend no more than 10% of your total line of credit), click Move, and voila! The amount will be deposited to your account immediately!

When should I repay the funds withdrawn from my Flexible Credit Building?

When you withdraw the funds from your Flexible Credit Building to your Spendable balance, the repayment is due every 30 days on the billing date, this is not influenced by the date funds are withdrawn but when the monthly fee is charged. You can repay back manually before the due date, or you can wait for us to auto-collect on the due date.

What happens if I miss a payment?

Just as making your payments on time will build your credit history, the inverse is true. Not making your payments on time will hurt your credit history. Make sure you have enough in your spendable to replenish your credit account at every billing date! We'll do our part and keep collecting the outstanding amount every time you load until the balance is paid.

What is a Utilization Rate and How Does it Work?

A utilization rate is the amount of credit you’re using divided by the total amount of credit you have available.

For example, let’s say you’ve been approved for a line of credit for $100. If you choose to withdraw all $100 that you were approved for, your utilization rate is 100%. If you choose to withdraw only $20 from the available $100, then your utilization rate is 20%.

What Utilization Rate Should I Choose?

With our Flexible Credit Building feature, you get to choose your utilization rate, but we recommend setting it below 10%. Our Credit Building experts have determined that a utilization rate above 30% is not ideal for increasing your credit history (it is likely to still increase, however potentially not as much as with a lower utilization rate).

How does it benefit my credit history?

Upon registration for the feature, your deposit is converted into a line of credit that will be reported to Equifax. Every time you spend from your deposit and repay the balance in time, you’re actively building your credit score! This process will repeat every month for as long as you stay subscribe.

How do I know if it's working?

Shortly after registering for the Flexible Credit Building in-app, you’ll be able to see your current credit history. Every month your credit activity is reported to Equifax and your credit history will update! Building your credit score takes time, so you might not see a change right away. Most users take three months to see improvements!

Why did my score go down?

When you initially sign up, a new tradeline is opened under your name. Opening a tradeline means you’re seeking to grow your credit, so you may see your score slightly decrease when a new tradeline is reported. A tradeline is important because it helps build a credit history, which in turn helps your score!

Making sure you’re paying any outstanding balance on time is really important. Timely payments play a major role in building a strong credit score. If outside of KOHO you have missed payments (car, credit card, bills, etc.), tried to get access to a lot of credit in a short period of time, or defaulted on any loans or accounts, this will also negatively impact your credit score.

Why is my score different than another reporting service that I use?

Currently, KOHO’s Flexible Credit Building tool pulls your score directly from our credit bureau. The score may differ from what you’re seeing using other score reporting services because there are two major credit bureaus in Canada and these agencies may have different criteria for scoring your credit!

When will KOHO appear on my credit report?

You can expect to see KOHO appear on your credit report in the second week of the month following your Credit Building registration. For example, if you registered at the beginning of December, you would see KOHO in your credit report the second week of January.

How long can I use this feature?

For as long as you like - keep in mind that building your credit score requires time and patience! Typically, it takes around three months before most users notice any significant changes in their credit score.

Can I change my available Credit Limit amount?

For the moment, it is not possible to modify your existing deposit limit. However, we are actively working to make this process more convenient in the future. The maximum available credit limit is $500.

If you'd like to cancel your plan, you'll need to cancel it before the end of the current billing cycle to avoid paying fees on the next scheduled billing date. Keep in mind that If you choose to cancel and later re-subscribe, your new subscription may be at a higher fee depending on the price of Flexible Credit Building at that time.

Keep in mind, while your security deposit will be returned to you upon cancellation, your subscription fees are non-refundable.

How do I cancel this?

People who build credit with KOHO usually start seeing their score increase at the 3-6 month mark. The longer you keep your credit line open the more your history will build.

To cancel your Flexible Credit Building, open the KOHO app and click on your credit line under your spendable balance. You will be brought to your Flexible Credit Building dashboard, simply click on the settings icon in the top right corner of your Flexible Credit Building page and select “Cancel Flexible Credit Building”!

Once cancelled, the remaining amount left in your Flexible Credit Building line of credit will be returned to your account immediately.

If you need assistance cancelling your plan, our friendly and knowledgeable team of agents are available to help 7 days a week! You can reach us through in-app chat or via email at [email protected].

Subscription Refund Policy

All KOHO subscription purchases are non-refundable. See our Terms of Use for more details.

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