In the interest of good financial practice, it is important for all consumers to do everything they can to keep their credit score in a positive light. Credit scores do not just dictate whether or not you can get a loan. Industries of all kinds are now relying on credit scores to make decisions about what kind of services are available and how much they will cost you.
Service providers, such as cell phone companies and insurance agencies, use credit scores to determine how much you need to pay up front for services and how much you’ll be billed for premiums. Low credit scores will dictate that you will need to pay more than consumers with better credit scores.
Ideally, there are a number of ways consumers can work to rebuild low credit scores and maintain them in a positive light. Credit unions are one option that many consumers are not even aware of but can still be an effective financial tool.
Understanding Credit Unions
Credit unions in the past generally required some type of eligibility criteria in order to open an account. The credit unions of today are not like that anymore. You can likely join a credit union whenever you want but it will be up to you to find one that works for you. Most credit unions do not advertise their services so with a little research you can find a facility that makes sense for your financial needs.
A credit union is a not-for-profit entity and is controlled by its members. During your research, make sure the money in the credit union is insured by the federal government through the National Credit Union Administration, which regulates and insures most of US credit unions.
How to Make a Credit Union Work for You
One of the benefits of a credit union is their ability to offer lower interest rates on loans and credit cards. Even if you have credit mistakes in the past, a credit union is likely to look deeper than a traditional bank when considering approval on a line of credit.
With the option of a low interest rate credit card or personal loan, customers of a credit union can get the financing or credit background they need to start rebuilding poor credit.
Small personal loans that are repaid on time each month can do a lot for boosting credit scores. The same is true of credit cards. With consistent repayment, the credit union will report back to the consumer credit reporting agencies and that information will be calculated into your credit score. In the same way that on-time repayments can improve credit scores, late or missed payments can negatively impact your credit status.
Another service credit unions provide for improving credit is financial education resources that can help consumers learn better strategies for money management, savings goals, and budgeting. Because a credit union works as a team to provide solutions members really need, you are likely to have more options afforded to you for free than you would ever get at a conventional large banking facility.