Loan approval with a poor credit history is challenging with most lending institutions. But at credit unions, it is less struggling as compared to a bank. Generally, they have more flexible lending standards than banks and membership is easy to obtain.
What are Credit Unions?
Credit unions are like banks, but they are not-for-profit entities and are under the control of their members. You can open your savings accounts with them, like a bank, and get your credit and debit cards. They have specific criteria for who can become a member. For instance, it can provide membership to individuals who live within a certain distance or belong to particular companies or labor unions. The members have the right to vote on issues that impact the credit union and elect the credit union’s board of directors.
Bad credit loan with credit unions
Credit unions offer loans to their members, including members with a low credit score, as they are more focused on serving their members.
If the credit union is affiliated with your employer or community-based, it can look beyond your poor credit history and consider your character and commitment to repay the loan. The most attractive feature of a credit union is the low-interest rate regardless of your credit score.
How to get a loan with a Credit union
If you meet the eligibility criteria of a credit union in terms of living or work in a particular area, you can become its member and apply for a loan. You can request credit union membership and a loan simultaneously.
You need to submit the following documents to become a member of a Credit Union:
- Identity Proof: You will need to provide a valid social insurance card and driver’s license.
- Employment Proof: They require your employment proof to check whether you have spent a certain amount of time and stability in your job.
- Personalized check: You will need to submit a personal check payable to the credit union.
- Proof of residency: It may be that a credit union prefers only a resident of its region. Therefore, they require your address proof.
- Age: You must be above 18 years.
- Fee Receipt: There is a one-time upfront fee to be paid to the credit union to become a member-owner.