Credit Union Loan??

Not sure if things show on a credit file, (they will know) but I've been saving (and occasionally borrowing) from one run by the local council I used to work for for about 18 years.

I think they are great - never had a single problem, and because they deduct x amount from my pension that I save, I don't really notice not having the money, and the savings have really built up, which acts as the collaterel if I ever need a quick loan.

The interest, both for saving and borrowing, is reasonable.

I'd really recommend them.

Lin

I save (and borrow) with my local Credit Union. I think they are fantastic. I pay mine on a weekly basis- occasionally I will leave It longer.. depends on circumstances. I find they are very friendly and informal too. I am not sure If It shows up on credit files, but I would doubt It. I just wished that I'd heard about Credit Unions sooner rather than later.

Hi all

I have been a member of a credit union for about 18 years now. But I am a mine of info on them as for the same length of time my Mam has been the treasurer of one in the North East.

They are all different and operate independently of each other. Your loan will not show up on your credit file nor will they do a credit search to give you a loan. Instead what happens is that you build up your own standing with them over time. You usually pay a £1.00 admin fee to join then you start saving - this can be as little as £1 a week. After a period such as 10 weeks you are normally allowed to take out a loan of £50

Once you have paid back your loan of £50 you can usually apply for a slightly larger loan of say £100.00 above what you have saved in your shares. Once again you pay this back all the time paying into your shares to increase your shares.

These two loans are qualifying loans and these are used to build up your own history with the Credit Union. They look at factors such as if you paid back your loan within the time frame, if you ever missed any payments etc.

After this is finished you can go onto a much larger loan I think mine was £1500.00 but this was a very long time ago. Each loan is considered individually and you will not get a decision immediately (can take up to a week). All the time you continue to pay money into your shares. I have over £1000.00 in my shares now but if I wanted to I could take out a loan of £5000.00 - that is the maximum that they are allowed to give out by law at the moment (It used to be £3000.00)

You continue to pay money into your shares as your loan is funded through other people who just save and don't take out loans. The interest is (I think) 1.2% per month (I can check with my Mam if someone wants this checked out but she is not in right now). It is paid on a reducing balance and you can overpay if you like. Generally if you hit financial trouble say - lose your job then they are quite understanding about renegotiating your loan. It is better for them to get £2.00 a week for ever more than nothing if you default as they have no way of getting it back. Some credit unions do push things through the small claims courts.

They are regulated by the FSA so your money is safe should anything go wrong with them. They are being hit hard at the moment as there are a lot of people out there who are not paying back their loans through losing their jobs etc

There are loads more things I could mention but I don't want to overwhelm people. If anyone wants anything clarifying then please let me know as I will ask my Mam to be sure.

A credit union is a good way to get a loan but unless you are not already a member it is not a quick fix. My advice is join anyway pay in your £1.00 a week (or month) and then it is always there to fall back on should you ever need it. Lots of older people use it as a savings scheme as there is some kind of insurance on the savings meaning that if you die your relatives get double the amount of money you have saved back and I think your loan may be written off too but I would need to double check those details to be absolutely sure.

I hope that this helps people

Jo

Hi I have just spoken to my Mam and I stand corrected on a couple of things. There are two different types of Credit Unions. My Mam is a treasurer of a community credit union (version1 credit union). The maximum they are allowed to give out as a loan is £5000.00. The other type are much larger and they tend to have millions in the bank hence they can give out much larger loans and mortgages as they can afford to take the hit. The community credit union that Mam is part of do not carry out credit checks but some CU's do. Some of the CU's have loans that are funded by the dept of work and pensions and they HAVE to carry out a credit check but just because you don't have a good score doesn't mean that you will not get the loan as there are other factors that they take into consideration.

Hope this helps someone

Jo