To boost folks' credit scores, a financial product called a credit-builder loan provides a loan of cash that borrowers can't spend, which is paid off a bit each month. The primary effect (and benefit) of the loan is that that the borrower's credit score goes up.
Some loans, across a variety of types including mortgages, home equity loans, car loans, and even credit cards, have restrictions on what you can use the proceeds of the loan for, and there are restrictions or different terms if you want to get cash out for more flexible use. Restrictions that apply to credit-builder loans seem to fit into that context; they're just tighter.
However, a prospective traditional lender looking at a credit history or score trying to decide whether or not to give a loan to a new person, wants to know something about that person's likelihood to repay when there aren't as many restrictions. Success with a credit-builder loan seems to indicate primarily (a) consistent identity and (b) that the person would like to increase their credit score, but it does not necessarily signal the kinds of things application-reviewers are really trying to assess (e.g. likelihood of repayment of a new loan).
Credit reports also differentiate between different types of loans (e.g. mortgage vs. car loan vs. credit card) and scores tend to increase when a person has multiple accounts and a mix of account types.
How do credit-builder loans show up on credit reports and factor in to credit scores?