How Credit Union Cards Can Help Improve Credit (2024)

FAQs

How Credit Union Cards Can Help Improve Credit? ›

Most credit card payments — including credit union credit card payments — are reported to the major credit bureaus. Paying your statement balance on time and keeping your balance low can be great ways to help build your credit. Members earn 2 rewards points for every dollar spent on purchases.

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.

A credit card can be a good tool for building credit if it's used responsibly. Responsible use includes things like making on-time payments and staying well below your credit limit. There aren't really any shortcuts when it comes to building credit with a credit card. Lenders look at how you manage debt over time.

A well-managed and long-held credit card could help to build your credit score over time. A good credit score could improve your chances of being accepted for credit in future. When using a credit card, always make payments on time and minimise what you spend.

A credit builder loan has a term of six to 24 months, with amounts ranging from $300 to $1,000. After you apply and are approved for the loan, the credit union or bank will deposit the full loan amount into an account for you. You'll make monthly payments over the course of the loan term until the full amount is paid.

By now, we know that applying for a credit card with a credit union rather than a bank will often result in lower interest rates and fewer fees.

Credit unions charge lower fees than other financial institutions, on average. 3 This may include lower or nonexistent fees for account maintenance or fee refunds for everyday banking activities such as ATM withdrawals.

How fast will a credit card build credit? ›

History isn't instant. If you haven't used credit before, it usually takes at least six months to generate a credit score – and longer to earn a good or excellent score.

It's a good idea to pay off your credit card balance in full whenever you're able. Carrying a monthly credit card balance can cost you in interest and increase your credit utilization rate, which is one factor used to calculate your credit scores.

It's a good rule of thumb to keep your credit utilization at 30% or lower. When you get close to maxing out your card, issuers might take that as a sign you're at risk of being unable to pay back what you're borrowing.

One of the best things you can do to improve your credit score is to pay your debts on time and in full whenever possible. Payment history makes up a significant chunk of your credit score, so it's important to avoid late payments.

When you open a new credit account, it lowers the overall age of your credit. In addition to the age of credit, opening up any new credit account generally requires a hard inquiry, which could ding your credit score a few points temporarily. After about two years, the inquiry should drop off.

Remember, building credit takes time and credit scoring models are based on your activity and account history over time. Simply put, one month of positive on-time payment history is great, but six to 12 months of positive payment history is better and will have a greater impact.

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.

What Are the Major Advantages of Credit Unions? Credit unions typically offer lower closing costs for home mortgage loans, and lower rates for lending, particularly with credit card and auto loan interest rates. They also have generally lower fees and higher savings rates for CDs and money market accounts.

A bank or credit union may make a soft inquiry on your credit when you open a new checking account to check for a history of fraud. These soft checks do not affect your credit score. However, in some cases, a bank may perform a hard credit check, which does affect your credit score.

If you want to build credit without a credit card, you might try a credit-builder loan, secured loan or co-signed loan. There are also ways to use rent, phone and utility payments to build credit. Some of these ways are free, others carry a fee.