Why Credit Unions are Generally More Flexible for Borrowers with Poor Credit Histories for Loans

Having a poor credit history does not mean that you will not find a lender that would approve your loan. It is hard to get the bank to approve your loan when you have poor credit history. However, you don’t necessarily need to get a loan from a bank. There are other types of lending institutions where you can get funding for your temporary financial difficulty such as credit union. You don’t have to put in any collateral when you sign up for a personal loan at the credit union.

Credit unions often have looser lending requirements and they will be willing to approve your loan if you have a poor credit history. A credit union is a smaller institution than bank and they will let you meet with the manager to discuss about the loan. The manager may take into account other factors such as education and income levels instead of looking at your credit score. By talking with the manager, you can get help for arranging a loan with interest fees and repayment plan that suits your budget.

Besides, credit union allows you to enlist a cosigner in the event that you lack payment history or have a low credit score. The cosigner is a third party who has agreed to be responsible in repaying the loan in the event that you can’t keep up with the loan payment. The cosigner can be your friend or a relative but not your spouse who shares the financial responsibility with you. It is important to find someone with a steady income and good payment history to become your cosigner. The good payment history of the cosigner will be used for approving the loan instead of your payment history.

Secured personal loans can also be signed up at the credit union. Credit union secured loans have lower interest rate compared to the secured loans offered by a bank. Many credit unions offer payday alternative loans that are without the exorbitant costs associated with payday loans. If you are in need of a small amount of money, it is safer to apply the loan from a credit union. The loan amount of the payday loan offered by a credit union is from $100 to -$1,000. The repayment period can be extended up to several months without the penalty charges.

The interest rate is much lower than a payday loan lender and you can get a discount in the interest rate when you choose automatic payment. Unlike personal loans, the credit union will not perform a background check or evaluate your credit report when deciding whether to approve the payday loan. They will only require you to hold a steady job and have sufficient income to cover the cost of the loan payment.