Credit unions are excellent options for accessing a range of financial services, from savings accounts to mortgage refinancing. As member-owned financial institutions, credit unions are not for profit and focus their resources on their customers.
Due to the competitive rates and member-friendly ethos of credit unions, many borrowers rely on their services for loans. Lower fees, better interest rates, commitment to members, and local community involvement make credit unions the go-to choice for personal loan applications.
Applying for a personal loan without doing research significantly impacts the rates, repayment terms, monthly payment totals, and other important loan terms. Before you begin the application process, here are six tips for getting the best credit union personal loan.
Check Your Credit Score
Whether you’re borrowing money from a bank or credit union, your credit score is crucial. All financial institutions determine your creditworthiness by pulling your credit score from one of the three major credit bureaus: Equifax, Experian, or TransUnion.
When conducting your credit assessment, loan officers evaluate creditworthiness in these key areas:
- Candidate character
- Capacity to make repayments
- Collateral if repayments aren’t made
- Capital gained from previous loan deals
- Circumstances that influence a candidate’s ability to repay the loan
Everyone’s personal and financial situations are different, so a specific credit score doesn’t guarantee the best loan rates and terms. However, it’s important to have a general idea of how these figures are interpreted on a broad scale. Here is a quick guide to credit score grading:
- 580 – 669: Fair credit score
- 670 – 739: Good credit score
- 740 – 799: Very good credit score
- 800+: Excellent credit score
A high score indicates you have a reputable credit history and display responsible financial behavior. This should make a credit union officer more confident when assessing your personal loan inquiry, qualifying you for competitive rates and more favorable repayment terms.
Credit scores below 580 are typically considered poor, and scores between 580 and 669 put you in the category of a subprime borrower. If your credit union loan officer views you as a risky investment, it’s challenging to secure favorable rates and loan terms. If you are a high-risk customer, your bank or credit union may deny your loan application or cap you at a lower loan amount.
You are entitled to a free copy of your credit report from one of the credit bureaus every year. You can apply for a copy of your credit report directly with one of these bureaus or through the Federal Trade Commission (FTC).
When you receive your report, study it carefully for problem areas or potential errors. Take note of credit account opening and closing dates, current balances, payment history, credit limits, loan totals, and identification information. This is an important method for recognizing identity theft or administrative errors, both of which may affect your score.
To dispute inaccuracies, gather all the evidence and discuss the issue with the bureau that provided your credit report.
Prepare for Your Application By Improving Your Credit Rating
To get the best personal loan from a credit union, take time to work on your credit score. Most lenders use similar criteria to determine creditworthiness. However, your local federal credit union may incorporate other factors into the assessment process, providing alternative means to gain favorable rates.
At T&I Credit Union, we offer a host of member services, providing customers with the information, tools, and confidence to regain control of their finances. We provide free credit score analysis seminars, finance trackers, and other counseling services to help members raise credit scores, reduce payments, and eliminate debt. By participating in some of our free services, you can put yourself in a better financial position for getting a personal loan.
The FICO score, created by the Fair Isaac Corporation, is the most widely used credit score in the United States. It uses several important areas to create an individual’s score:
Payment History (35% of FICO Score)
Your payment history takes into account how you dealt with previous bills and whether you made payments regularly and on time. Late or missed payments harm your score.
Current Level of Debt (30% of FICO Score)
Debt isn’t always a bad thing. A manageable level of debt demonstrates financial responsibility, as long as you make repayments on time. Your credit utilization ratio is a key metric in determining creditworthiness and shows how much revolving credit you use. It is typically displayed as a percentage.
For good loan rates from a credit union, keeping this figure below 30% is recommended. Keeping your credit usage at 7% and under can secure you the best deals.
Length of Credit History (15% of FICO Score)
The average age of all your combined credit counts is very important. The longer you’ve had these accounts open, the higher your score.
Types of Credit (10% of FICO Score)
Your credit mix refers to the different types of credit linked to financial accounts, including credit cards or existing loans. Several well-managed types of credit can raise your score compared to a single account. However, a very high number of credit accounts can work against you.
New Credit Accounts (10% of FICO Score)
This figure includes any recent credit accounts and the number of hard inquiries documented on your record. Hard inquiries happen when a lender requests to view your credit report after you officially apply for a new line of credit. These credit checks usually reduce your score temporarily by no more than five points.
Here are some tips for getting back on track with your credit score:
- Avoid missing bill payments
- Don’t overuse available credit
- Limit hard inquiries with financial institutions
- Keep old accounts open
- Pay off high-interest debts
- Consider debt consolidation
- Use financial and credit monitoring services from your local credit union
- Pay off credit cards strategically
- Bolster your credit file with new accounts
Choose the Right Type of Loan
At T&I Credit Union, we offer a range of personal loans, each with different uses, interest rates, and approval requirements. Our most popular personal loan options include:
Signature loans from T&I Credit Union allow borrowers to pay for unexpected medical expenses, home improvement work, or emergency car repairs. We offer signature loans up to $10,000 for up to 36 months.
We offer personal loans up to $10,000 for consolidating debt over 24, 36, or 48 months.
T&I Credit Union members can take out life loans for holidays or weddings. These loans are capped and have a set repayment term.
Invest in your future with a student loan from T&I Credit Union. Adding a trusted co-signer can help you secure even lower rates.
Explore your options before deciding on a lender. While banks and online lenders are popular sources, they tend to be more costly than credit unions. Higher interest rates, origination fees, and additional administration costs add up very quickly.
At T&I Credit Union, we offer competitive rates and favorable terms on all personal loan options. As a member-focused organization, we aim to provide quality financial services that improve the lives of our customers. We’re happy to work with all members, whether or not you have a strong credit score or financial history.
Use our online personal loan calculator to estimate the cost and rates of a personal loan. For more detailed information or to get the application process started, contact us or apply online.
Have Relevant Documents Available
Providing proof of your credit history, tax returns, income, and personal identification can quickly improve your chances of loan approval. Failing to provide necessary documentation on time can result in interest rate fluctuations, preventing you from securing the best loan rates possible.
Choose a Suitable Repayment Period
Longer repayment periods may help you negotiate lower regular repayment sums, but they typically result in you paying more for your loan in the long term.
However, if you want to take advantage of lower interest rates and avoid accumulating additional charges in the long term, negotiate with your lender to pay back your personal loan as quickly as possible. Ensure you don’t incur a prepayment penalty for paying your loan off early.
At T&I Credit Union, some of our loans are repayable over 12 months, with other options allowing you to repay for up to 48 months. Choose a suitable repayment period to get the best personal loan for your needs.
Choose T&I Credit Union for Affordable Personal Loans
With T&I Credit Union, a low-interest personal loan is a great way to invest in your future, whether you’re paying for college, a wedding, or a family vacation. Our member services help you track your finances, making repayments manageable.
In addition to financial counseling, we offer members access to online banking, a mobile app, eStatements, loan calculators, and more.
Browse our website to explore your personal loan options, or give us a call to see if you qualify for a personal loan at (248) 588 6688.