Understanding the different roles of Snap Finance and credit-building products
Snap Finance helps you get the items you need today, but does not build your credit score. Learn how to cover today’s essential purchases with Snap’s lease-to-own financing and how separate credit-building tools may improve your credit profile over time.
Key takeaways
Snap Finance and credit-building products serve different purposes. Snap Finance can help you access essential purchases today, while credit-building products may help improve your credit profile over time.
Payment history matters most. Payment history makes up the largest factor of your credit score, making credit-reporting accounts an important part of building credit.
Pay over time without draining savings. Financing essential purchases can help preserve emergency funds when unexpected expenses arise.
Credit growth requires reporting. To build credit, use products that report to the major credit bureaus, such as credit-building cards, secured cards, or credit-builder loans.
Snap solves today's purchase needs. Credit-building products are designed to support tomorrow's financial goals. Here's how they work together.
The financial tools available today can get confusing fast. What can improve my credit score? What helps me make a purchase when cash is tight? How do I know which tool is right for the job?
Two commonly used and often misunderstood tools are lease-to-own financing and credit-building products. While they may seem similar on the surface because both involve making regular payments over time, they are designed to accomplish very different goals: Snap Finance’s lease-to-own financing is designed to help you get the items you need today, while credit-building products are designed to help you access credit while also improving your credit profile for tomorrow.
This is an important distinction because Snap’s lease-to-own payments (on-time or missing) are not reported to the major credit bureaus. Snap Finance helps consumers obtain essential purchases when traditional financing may not be available – such may be the case for 78% of consumers with credit scores below 670 have been turned down for financing.
However, for roughly 45 million Americans who either have no credit history or a credit file too thin to generate a traditional credit score, building credit may be a priority in tandem with shopping for today’s needs.
This blog will show you how, including explaining how lease-to-own financing and credit-building products work, where each fits in your financial toolkit, and how to use both together.
Why Snap Finance does not build credit (and why that's okay)
One of the most asked questions: “Does Snap Finance help build credit?” The short answer: no. Here’s why Snap Finance’s lease-to-own financing does not impact your credit score and how that helps you decide when it could be the right move for you.
Snap’s lease-to-own activity is not reported to major credit bureaus
By not reporting lease-to-own activity to the three major credit bureaus – Experian, TransUnion, and Equifax – lease payments do not appear on your credit report with those bureaus. This means paying on time will not increase your credit score.
In other words, Snap’s lease-to-own financing activity doesn’t impact your FICOⓇ score or VantageScore during normal use.1 Keep in mind that Snap obtains information from consumer reporting agencies in connection with applications, and your score with those agencies may be affected.
Snap was built for a different job
Snap’s lease-to-own financing exists because many consumers struggle to access traditional financing.
When a refrigerator stops working, a tire blows out, or a child suddenly needs a laptop for school, waiting months to improve a credit score may not address an immediate need.
Lease-to-own financing may be an option in these situations. It gives consumers access to essential purchases today, even when credit cards, personal loans, or traditional financing options are unavailable.
Lease-to-own financing is different from Buy Now, Pay Later (BNPL)
Consumers often compare lease-to-own financing with Buy Now, Pay Later (BNPL).
The important thing to understand is that reporting practices vary widely. Some BNPL providers report payment activity to the major credit bureaus while others do not.
Snap's approach is straightforward: lease-to-own activity is not reported to the major credit bureaus.
Understanding that distinction can help you make informed decisions when comparing financing options and deciding which approach is best for you.
How Snap can fit in your financial toolkit
The immediate-need layer
Life does not always wait for your credit score to improve.
Sometimes the refrigerator breaks. Sometimes the washing machine stops working. Sometimes your tires are unsafe to drive on.
All of these situations require solutions now – and Snap’s lease-to-own financing can help you get the fix you need.
This is a financial tool that may help keep your household functioning when unexpected expenses arise.
Preserving available cash
Never underestimate the value of an emergency fund.
While it’s there to help cover life’s surprises, draining it completely when the refrigerator breaks can leave you vulnerable if another expense pops up next month. Lease-to-own financing can help you get the replacement you need while preserving some of your financial cushion for whatever comes next.
The financial breathing room may never show up on a credit report, but it still has real value.
How to build credit alongside Snap’s lease-to-own financing
Add a product that may build credit
The most common gap in many consumers' financial toolkits – especially those with credit challenges – is a credit product that reports to the major credit bureaus. One potential way to fill that gap: a card that may help you build credit with responsible use and on-time payments.
The Seen MastercardⓇ is one such example. Seen reports account activity, both positive and negative, to all three national credit bureaus and offers a prequalification process that does not impact your credit score.
If your goal is improving your credit profile, you may want to consider Seen MastercardⓇ. See if you prequalify today.
The Seen™ MastercardⓇ is issued by Coastal Community Bank, Member FDIC pursuant to a license from MastercardⓇ International Incorporated. Not available in all U.S. states and territories. Must be 18 years old (19 in NE and AL) to apply.
Reported accounts
There are several ways to establish a positive payment history, such as traditional credit, credit-builder loans, secured credit cards, and becoming an authorized user on a trusted family member's account.
The common denominator is reporting to national credit bureaus. These accounts create a payment history footprint that appears on your credit reports that may contribute to your credit profile, depending on other factors.
Snap does not perform that function, however, pairing lease-to-own financing with one or more credit-building tools may help cover both needs at the same time.
Track what actually matters
If your goal is building credit, pay attention to your accounts that are being reported.
You can review your free credit reports through AnnualCreditReport.com and monitor your progress over time. As positive (or negative) payment history accumulates, you can see the results reflected in your credit profile.
While important to keep tabs on your lease-to-own financing activity, it will operate independently of your credit-building efforts.
Best practices for using Snap Finance and building credit at the same time
Use lease-to-own financing for the big-ticket items you cannot pay cash for
Snap’s lease-to-own financing is most often used for larger essential purchases – such as furniture, appliances, electronics, tires, and jewelry – when paying a lump sum upfront may not work for you.
When using Snap, make your payments on time and keep your account in good standing. While lease activity is not reported to the major credit bureaus, unresolved accounts that eventually lead to collections could affect mainstream credit reporting.
Credit card usage
For everyday purchases such as groceries, gas, streaming services, or phone bills, consider using a credit card – such as the Seen MastercardⓇ – that reports to the national credit bureaus.
Responsible credit use and on-time payments may help establish a positive payment history that appears on your credit report.
Review quarterly
Every few months, check both sides of your financial picture. This includes reviewing your Snap Finance account standing as well as your credit score and credit reports. Then, adjust your strategy from there.
Remember that small improvements compound over time. Using credit wisely, including lease-to-own financing, may help you achieve your goals.
Ready to build out your financial toolkit?
Snap Finance and credit-building products are not competitors. They achieve different financial goals.
Snap helps you get the items you need when traditional financing may not be available, while other products help establish the payment history that can improve future borrowing opportunities, depending on your use of credit.
Some consumers may choose to use both, depending on their circumstances.
Looking to obtain today’s essential purchases? Apply for Snap Finance today – perfect credit not required.1
Looking for other options? See if you prequalify for the Seen MastercardⓇ.
The advertised service is a lease-to-own agreement provided by Snap RTO LLC. Lease-to-own financing is not available to residents of Minnesota, New Jersey, and Wisconsin.
1 Not all applicants are approved. No credit history is required. Snap obtains information from consumer reporting agencies in connection with your application; this does not impact your FICO® Score, though other credit scores may be affected.
The Seen™ MastercardⓇ is issued by Coastal Community Bank, Member FDIC pursuant to a license from MastercardⓇ International Incorporated. Not available in all U.S. states and territories. Must be 18 years old (19 in NE and AL) to apply.
The information provided is for educational purposes only. It may not be applicable or appropriate for all potential individual circumstances. You should consult with a professional to carefully consider your individual needs, circumstances, and objectives before making financial decisions. Seen Finance, Inc.™ is not a credit repair services organization.