Car Loans Can Be Expensive. Credit Unions Can Help
Have you recently applied for a credit card, or an auto loan at a large bank, only to be turned down because of poor credit? If so, then you are not alone. More than one out of five adults are either unbanked or underbanked resulting in poor to no credit history at all. Thankfully, there are other options!
Using credit unions can help your chances of qualifying for both low-interest loans and credit cards even if you have a weak credit score, many. Throw an alternative credit score into the mix and you will be well on your way to finding a deal that works for you. Let’s go over how you can take advantage of these tools!
What are Credit Unions?
A credit union is a privately owned non-profit institution. This means they are not in it the business of making profits over helping consumers. Unlike their counterparts in public banking who have to answer to their shareholders, credit unions have only one responsibility…their members! Yes, I know it may seem crazy to think that an organization is looking out for the best interests of their customers, but that’s exactly why credit unions were founded.
Credit unions are built around groups of people who have similar interests. A good example is Navy Federal Credit Union which exclusively accepts members who have ties to the US Armed Forces.
Now not everyone can qualify for membership, but that is why there are hundreds of credit unions available. Whether it’s based on your area, industry, or interests, there will be a credit union that is right for you.
What are the Benefits of Credit Unions?
For one thing, since you are not only a customer but a member, you have increased flexibility in whether or not you will be approved for a loan. This is great for people who have a weak credit score.
Since members are connected through a similar interest or industry, it allows credit unions to tailor their products and terms. Normally this narrow approach to banking would be frowned upon, but since credit unions are specialized institutions, it means you can get better deals than you would normally find at a public bank.
Credit unions are also incentivized to offer lower interest rates in general. A large number of these institutions means that there is more competition; if one union gets your business then the other will not. This is a huge benefit to the consumer. Shop around for one that works for you.
Applying for a Loan at a Credit Union
Although credit unions are more flexible when approving your loan, your credit score will still play an important factor. So be sure to give yourself the best odds when applying and use an alternative credit score.
What is an Alternative Credit Score?
Unlike traditional credit scores, an alternative credit score refers to payment information associated with regular expenses such as phone, internet, utility bills, or even subscription services. This score will give you a better chance of getting a loan.
Now you may think that credit unions won’t accept alternative credit scores, but according to the Equal Opportunity Act (ECOA), they need to consider it in making a lending decision.
To get your alternative credit score, check out Connect. We are a 100% free service. In addition to getting your alternative score, you will also get access to all our management platforms when you sign up.