What is a Credit Union?

A credit union operates much like a bank, but the main difference is that it is not owned by shareholders who are trying to make a profit. Instead, a credit union is member-owned and operates on a not-for-profit basis. Everyone who has an account at a credit union is considered a member or owner! Membership at a credit union is typically based on a commonality between members. Examples of this include: working for the same employer or industry, or simply living or working in a specified geographic area. Credit unions are known for focusing on helping to improve the livelihoods of their members. It’s common for them to offer low interest loans and encourage saving.

Credit unions typically offer a variety of financial products and services including:

  • Current accounts
  • Savings accounts
  • Credit cards
  • Mortgages
  • Junior or christmas savings accounts 
  • Prepaid debit cards 
  • Insurance products
  • Cash ISAs

Does a Credit Union Help Build Credit?

Yes, credit unions can help build your credit but to build credit you’ll need to open an account or take a loan with the credit union. Credit unions tend to have a reputation of helping members save regularly and borrow responsibly.  It makes sense for a credit union to help members build credit because the organization is much better off with financially healthy members. For people who are building or rebuilding their credit, credit unions may be one of the best routes to take.

How Does a Credit Union Help Members Build Credit?

  • Offering credit builder loans: Credit builder loans are small loans designed to help build a good credit profile by establishing regular on time payments. Credit unions happen to be one of the most likely financial institutions to offer this type of financial product.
  • Lower fees and penalties. Every penny matters when it comes to building your credit file which is why it’s important to avoid unnecessary fees and penalties. Credit unions typically offer much lower fees than high street banks due to the fact that they are not trying to keep shareholders happy by turning a profit. The less fees you’re paying to a lending institution, the more you can put toward making actual payments, whether for a loan or other bills.
  • Community focus benefits members. Credit unions are typically either based around a common interest such as a profession or location so they tend to be more capable of offering custom financial advice for individuals. This is because credit unions do best when their members are succeeding. For this reason, Credit unions typically invest more time and energy in educating their members as well. This helps people learn more about their finances and have a solid foundation for building up their credit score.

Portify Works The Credit Builder Without A Credit Card or APR

Joining a credit union is a great way to get started building credit but there are also other ways that can help take your credit building journey to the next level. Portify partners with Experian, Equifax and TransUnion to improve your credit history through your monthly membership fee. The longer you’re a member, the more credit history you build. Whether your goal is to build your credit to purchase your first home or to get yourself out of debt, combining Portify’s credit builder app with services offered by credit unions is a great way to get on the right track!

lauren

Lauren Robson is the digital communications manager at Portify.
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