As you might expect, your credit history and credit score are particularly relevant when you are trying to become a member of a credit union.
However, you might not have the best credit score for whatever reason, but you still want to join a credit union.
Bad credit is not necessarily something that will completely prevent you from joining a credit union, though.
Here are some tips for you if you want to join a credit union even though your credit score isn’t very good at the time you want to join.
1. Check Your Consumer Banking Report
Contrary to what some people may believe, your credit score is not actually the primary factor that is considered when you are trying to open a deposit account with a credit union in the United States.
Your consumer banking report is actually more important. Your consumer banking report shows the history of all the bank accounts that you have had, to some degree.
ChexSystems has this consumer banking report on you.
The consumer banking report from ChexSystems shows any past bank accounts that have outstanding debts, have been reported for a certain reason, or bank accounts that have been mishandled in some way.
2. Recognize that Credit Unions Require Membership
Credit unions are different from banks in a number of ways.
One of these ways is that banks have customers while credit unions have members and this is because a credit union operates as a non-profit organization while a bank obviously does not.
A credit union’s earnings go back to the members of the credit union.
This may come in a number of different ways, ranging from higher deposit rates and lower account fees to lower borrowing rates.
It is also important to keep in mind that credit unions each have their own set of criteria to figure out if you are eligible for membership or not.
These can vary from credit union to credit union.
However, in most cases, these requirements focus on whether you live, work, or worship in a certain area or not.
Additionally, your affiliation or lack of affiliation with particular organizations, groups, or companies might also affect whether you are eligible to join a certain credit union.
As you might have noticed, your credit score is usually not a part of the considerations when you are trying to join a credit union.
This is part of how you can join a credit union with bad credit.
3. Consider Second Chance Accounts
Even if your ChexSystems report is not ideal, that does not mean you cannot get an account with a credit union.
Second chance accounts are specifically made for individuals that do not have the most positive history when it comes to their past bank accounts.
Most of the time, second chance accounts are available in the form of some kind of checking account.
However, second chance accounts are certainly different from more traditional checking accounts in a few ways.
A second chance account will most likely include a monthly fee that cannot be waived, which is often not the case with traditional checking accounts.
Another important difference is that you typically cannot write paper checks using second chance accounts.
You still may have the ability to use your second chance account for both transfers and online bill payments.
Despite this, you cannot give someone a check as payment if you’re using a second chance account.
The reason for this is simply that this decreases the chance that you will overdraft your account and get a negative balance.
Thankfully, quite a few credit unions offer you second chance accounts. Second chance accounts help you improve your credit, so you can use all of a credit union’s services once you join it.
4. Credit Unions Do Care About Your Bad Credit Sometimes
As previously stated, bad credit does not prevent you from joining a credit union.
However, you might find it more difficult to take advantage of some of the services that the credit union offers if your credit score is poor.
Bad credit does matter if you apply for a credit line or a loan with a credit union.
Bad credit can decrease your chances of qualifying for various types of loans such as credit cards, personal loans, auto loans, mortgages, home equity loans, and lines of credit.
In general, though, credit unions are often more willing to work with you to assist you in getting a loan that you need if your credit isn’t great compared to banks.
5. Secured Loans Can Prove Useful
If you are concerned about your bad credit affecting your ability to join a credit union or get approved for loans, secured loans can help you.
Secured loans are loans that utilize the money you deposit in them as collateral. You don’t have to worry about bad credit affecting your ability to get a secured loan.
This is because secured loans are much less influenced by your credit score or even your income since your own deposit is used as collateral to secure the loan.
Secured loans are also known as credit builder loans.
Secured loans are called this because they are a good way for you to improve your credit as long as you ensure that you are making your payments on time.
You should know that your credit limit may be the same as the amount of collateral you have and interest rates on secured loans are usually quite low.
After you have used secured loans to rebuild your credit, you now have a better chance of getting approved for various kinds of loans once you have joined a credit union.
If you are someone who meets the membership requirements for joining a particular credit union, then you shouldn’t have to worry too much about your bad credit getting in the way.
Bad credit might make it harder for you to get approved for loans, though. Quite a few credit unions will work hard to give you the financial services and products that you need even if you do have bad credit.