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How to participate, to Apply and borrow from a Credit Union

A loan from a credit union is one of the most competitive loans available. If you need to borrow money, it is worth getting a local credit union when you go looking for a loan.

Credit unions loans typically come with low rates and fees, which means a lower total cost of borrowing. What’s more, it might be easier to get approved for a loan against a credit union.

No one wants a loan that does not get repaid, but small credit unions are more likely to take a more personal approach when evaluating your loan rather than taking the same rigid approach with anyone who applies for a loan.

Getting started with credit institutions


If you have never used credit unions before, you may not know much about them or you may just think they are the same as banks. There are numerous agreements between banks and credit institutions, but an important difference is an ownership: Credit Unions are non-profit organizations owned by their customers.

Most credit unions work with the aim of providing financial services to their member-owners. As a result, credit union loan rates often come from a little bit lower (compared to large banks that must constantly grow profits).


To apply for a loan, you must become a member or a partial owner of the credit union.

  • Membership criteria: To become a member, you must qualify by meeting certain criteria. That means that you usually share some characteristics with other members, such as where you live or the industry in which you or your family members work.
  • Easy ways in No matter who you are, there is a good chance that you can participate in a credit union, and you will be amazed at how easy it is to qualify. For example, when buying a car, you will find that the dealer is able to give you a member without ever having to visit one of the branches. By buying from that dealer, you meet one of the credit union’s eligibility requirements.
  • Finding a credit union: To find out which credit unions are available in the area, try the National Credit Union Administration credit union search tool. If you can’t find anything locally, numerous credit unions accept members from all over the United States.
  • Opening deposit: Once you have found a credit union that you are eligible to join, then you have to become a member by opening an account and making a small amount (often $ 25 or so). After that, you are ready to apply for a loan.

Apply for a loan

Apply for a loan

In many cases, you can participate in a credit union and apply for a loan at the same time. If you are already a member, you are much further ahead.

Talk to a credit officer to your credit union to understand the types of loans available and ask about the basic requirements for getting your loan approved. The process varies from place to place, but most credit unions (and any other lender) have the following requirements:

  • Application: You must complete an application, online or on paper.
  • Identification: On the application, you must provide identifying information about yourself, such as a social security number.
  • Employment: Some credit unions require you to have been in the same job for a certain time (one year, for example).
  • Income: You will need income to repay the loan, and you need to tell the credit union how much you owe on other debts. Your monthly payments on all debts will have to be under a certain debt-to-income ratio.
  • Equity or down payment: If you are buying a house or a car, you need to make some sort of down payment. For refinancing, you will need sufficient equity, usually measured as a loan-to-value ratio.
  • Creditworthiness: A history of loans and loan repayment will help you get approved. Your credit score is often used to assess creditworthiness.

There is nothing wrong with asking someone at the credit union about these requirements before you apply for a loan. A short conversation can save you (and them) time. For example, if you know your credit score, get an informal opinion about whether you qualify and as a recent foreclosure discuss any issues.

To the approved


After you apply, a loan officer will review your application to see if you are eligible for the loan. Even if you do not have a solid history of loan repayment or you have had a few problems in the past, you would still get approved for a loan. Especially in small community settings, there is a good chance that you can speak to an employee who will personally review your credit report and your personal situation. Sometimes a personal letter can help. That will rarely happen on a large bank – if your credit score is too low, there are no exceptions, and a computer will decide everything.

A long-term relationship with a credit union and getting to know the staff can improve your chances even further. If they see you manage your accounts properly, they are more likely to overlook a blemish in your past.

A secured loan can also help you get approved and it will help you build up your credit scores for the next time you need a loan. To get a secured loan, you need some sort of collateral, which the credit union can take if you fail to make your payments. You do not have to pledge your home, car, or cash-covered jewelry using money in your account to help you get approved.

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