What is a credit union?
What does ‘credit union’ mean?
A credit union is one alternative to banks or other forms of borrowing. It’s a not-for-profit organisation that’s typically run by its members. The members usually share some sort of bond – for example, they may live in the same area or work at the same place. They pool together to lend money to each other. Credit unions in the UK are regulated by the Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA).
How does a credit union work?
Credit unions are co-operative organisations that act in the interests of its members. They tend to encourage members to save regularly and only borrow what they can repay.
Do credit unions offer loans and mortgages?
Credit unions provide services related to loans and savings. Some also offer current accounts and mortgages.
Can you apply to join a credit union with bad credit?
You might be able to join a credit union if you’ve got bad credit. There are other requirements you may need to meet as well in order to be a member.
Can you get a credit union loan with bad credit?
Some credit unions could potentially lend you money even if you have bad credit. They may require that you start saving with them first, though.
How much can I borrow?
It varies according to the credit union, but they can offer small loans, while high street banks may not.
Getting a credit union loan
Some credit unions will need you to start saving with them before you can apply for a loan. There are usually no hidden charges, nor fees for early repayment. They typically provide free life insurance at no extra cost when you take out a loan with them, so that the loan is considered repaid if you die.
Some credit unions use credit reference agencies as part of their vetting process. So if you apply for this type of loan, it may show up as a credit search footprint on your credit report.
How can I join a credit union?
One way to check if by using the Association of British Credit Unions Limited (ABCUL)’s Find Your Credit Union website.
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