Credit Union Application And Factors That Help Even With Bad Credit History
It may not be a surprise how a credit union becomes an option after traditional banks have turned down an individual. Some unions even give better benefits. However, some people are still unsure if they should apply, knowing that they have a bad credit. They are scared that even after going through some process, they’d still get denied.
Do your previous issues with them and credit matter that much in setting up an account? Are there any other options to compensate for these issues in joining a credit union? This article will list down some of the important information you might need and how to apply even with bad credit.
What’s A Credit Union?
A credit union is a financial cooperative that gives services like a regular bank does. Ranging from small to large entities that have thousands of participants from all over the states, these credit unions can be made up by large organizations, corporations, and other institutions for their members and employees.
At first look, a credit union may look a lot like a savings bank. Like a conventional bank, it also offers savings and checking accounts, credit and debit cards, and other consumer loans like home mortgages and auto loans. Unlike other organizations that are mostly owned by shareholders, credit unions are owned by depositors.
Know Your Credit Score
Although credit union lending policy is different from regular banks, the loan application process is almost the same; you need to submit necessary documents and other proofs like a Social Security number and even a credit score report using Chexsystems. However, if you are worried about your credit score, there are some credit unions that don’t use chexsystems.
It is always one of the best moves to check and know your credit status before you make an attempt to apply for a loan. Knowing your credit score will help you understand what to expect once you apply for a loan, like the rates you will be qualified for.
Think About Second Chance Accounts
If you are one of the many people that have been turned down for an application due to previous bank issues like a closed account because of unpaid overdraft fees, a second chance checking account could be one of your best options. It can help you rebuild your banking history, but you only have limited access to its services.
Financial institutions are well aware that there is a big market in redemption. This is why they offer ways for their clients that have a not so perfect financial background to get back on track. A second chance checking account is by far the most common for this option. If you have proven to be financially-responsible over time, credit unions may offer you to convert into a regular account.
Pay For A Membership
Credit unions are unlike commercial banks as they have members instead of customers or clients. Not to mention they are non-profit institutions. They intend to return the earnings to their members through higher deposit rates, lower account fees, and lower borrowing rates. However, every credit union has its own basis to check your eligibility.
Most credit unions base their membership on connection with a specific group, may it be occupation or interest, and if it happens that you are not eligible to join, others will let you if you pay a membership fee. If they make it easy for you to be part of their union, you should grab the opportunity right away.
Look For Secured Loans
If it is a line of credit or loan that made you decide to look for a credit union, you might want to consider a secured loan instead of the regular unsecured one. With secured loans, your deposits will be used as collateral against your line of credit or loan.
With secured loans, you have a higher chance of being approved compared to applying for an unsecured. It is one way to double your capital and an excellent way to rebuild your credit incrementally and realistically. Another incredible thing about these loans is that it does not depend so much in your credit score as they are secured with cash collateral.
Some people call this the credit-builder loan as they are best in recovering from a bad credit score, given that you keep on-time payments. The borrowed funds will not be used for anything. You are lending money to repay it with the aim of making your credit reports good. Once your credit is showing improvement, you may then apply for a regular, unsecured loan.
Bad credit should not be a blocker for people who want to join a credit union. Credit unions are helping the individual to improve their credit score. Therefore it only makes sense that it is available for them. Regardless of whether you have had a bad history with bank accounts or credits, many unions are willing to work with you and help you out.