Does being in a credit union affect your credit score?
Joining a credit union won't help build your credit score on its own, but it can be a good first step toward building your credit. Here are a few other ways that you can build your credit score: Use a credit card cosigner to increase your approval odds. Apply for a secured credit card, which requires making a deposit.
Because credit unions are not-for-profit, they can offer members numerous benefits that can directly and indirectly build an individual's credit score.
Limited accessibility. Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.
While the individual options may differ from one to the next, most credit unions offer custom loan programs designed to help borrowers establish credit for the first time or rebuild damaged credit. Some credit unions use aptly-named “credit builder loans” that function much like secured credit cards.
Banks, credit unions, retail credit card issuers, auto lenders, mortgage lenders, debt collectors and others voluntarily send information to credit reporting companies.
| APR range | Minimum credit score requirement | |
|---|---|---|
| Best Egg | 8.99%-35.99% | 600 |
| LightStream | 7.49% to 25.49%* with Autopay | 695 |
| Upgrade | 8.49%-35.97% | 600 |
| SoFi | 8.99%-29.99% | 680 |
Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.
Membership requirements. To open an account with a credit union, you must become a member. Many credit unions determine membership eligibility based on where you live, work or worship.
First, bankers believe it is unfair that credit unions are exempt from federal taxation while the taxes that banks pay represent a significant fraction of their earnings—33 percent last year. Second, bankers believe that credit unions have been allowed to expand far beyond their original purpose.
Credit unions tend to offer lower rates and fees as well as more personalized customer service. However, banks may offer more variety in loans and other financial products and may have larger networks that can make banking more convenient.
Do credit unions build credit faster?
It's up to you, not credit unions or anyone else, to build your credit by making timely payments to them every time. Every one of us builds our our personal reputation, and that includes financial reputation, by our own actions. Only if you borrow from them; think car loan, personal loan, credit card, mortgage, etc.
Is It Easier to Get a Credit Card From a Credit Union? When you apply for a credit card through a credit union, you may expect the credit union to check your credit score. However, as a member with less-than-perfect credit, you might find it easier to qualify for a credit card through your credit union than a bank.
Eligibility requirements for personal loans from credit unions are less strict than a bank's criteria. In particular, a low credit score may not disqualify you from a loan with a credit union, because a credit union is more likely to take into account your overall financial circ*mstances.
In the U.S., the average credit score is 716, per Experian's latest data from the second quarter of 2023. And when you break down the average credit score by age, the typical American is hovering near or above that score.
| Rank by Asset Size | Credit Union Name | Total Assets |
|---|---|---|
| 1. | Navy Federal Credit Union | $168.4 billion |
| 2. | State Employees' Credit Union | $50.68 billion |
| 3. | Pentagon Federal Credit Union | $35.36 billion |
| 4. | Boeing Employees' Credit Union | $29.17 billion |
Though it may be more challenging to find a lender that's willing to work with you, it is indeed possible to obtain a loan with a credit score of 550. Most lenders require a minimum credit score of between 600 and 650, but some lenders specialize in personal loans for those with lower scores.
Conventional loan | Credit score: 620
To qualify for a conventional loan, you'll need a credit score of at least 620, though some lenders may choose to approve conventional mortgage applications only for borrowers with credit scores of 680 and up.
Check your credit score
Your credit score can make or break your ability to get a $10,000 loan. Generally, it can be hard to meet personal loan requirements if your credit score is below 640. That doesn't mean that it's impossible, but you may need to stick to bad credit loans (which typically have higher APRs).
To qualify for most types of mortgages, you'll need a credit score of at least 620. Some loan types, such as FHA loans, accept lower scores, but a higher score will almost always get you the lowest available interest rate. And that could save you a significant amount over your loan term.
If the bank fails, you'll get your money back. Nearly all banks are FDIC insured. You can look for the FDIC logo at bank teller windows or on the entrance to your bank branch. Credit unions are insured by the National Credit Union Administration.
What happens if a credit union fails?
If a credit union is placed into liquidation, the NCUA's Asset Management and Assistance Center (AMAC) will oversee the liquidation and set up an asset management estate (AME) to manage assets, settle members' insurance claims, and attempt to recover value from the closed credit union's assets.
If you want higher deposit rates and don't need access to branches across the country, for example, you might prefer a credit union. If you want access to in-person services and don't mind lower interest rates, a bank might be more suitable.
The downside of credit unions include: the eligibility requirements for membership and the payment of a member fee, fewer products and services and limited branches and ATM's. If the benefits outweigh the downsides, then joining a credit union might be the right thing for you.
For example: A history of writing bad checks. Some people are listed in a database of customers who have been identified as having mishandled checking accounts in the past, which means the bank or credit union is less likely to let them open a checking account.
If your current savings account isn't offering competitive rates, opening a second account at a different bank or credit union could be a smart option. Multiple accounts can offer you additional FDIC coverage, and help you achieve specific savings goals.
