Credit Unions

pinkypoopydoo

I've just been turned down by a credit union for a loan. I've held a savings account with them for over a year, and was under the impression that, given that I have an excellent credit score, a loan wouldn;t be an issue (certainly that was what I was told when I first approached them about savings and loans)

I have become self employed within the last year, so my excellent credit score is coupled with a lowish income, meaning that no mainstream lender will touch me as yet. Before that I was on income support, as my ex upped and left me with no job (I gave up a good career to look after our children), no maintenance, and a good deal more than half my fair share of marital debts.

I have managed to pay off several debts in the last few years, with 4 debts (with fairly high interest) being left before I tackle the mortgage. I continue (as I did when I was on income support) to chip away at the biggest debt first, and have not missed a payment of any kind in the 6 years since my husband left. All I wanted to do was consolidate, and bring down my monthly outgoings (by a significant amount), meaning I could pay off the outstanding balances, close the accounts, and get rid of some very high interest debt.

Now that chance has been refused, I'm left wondering, what is the actual point of credit unions? I'm peeved......:mad:

Tixy

Most credit unions focus on the borrower's ability to repay not their credit file. In fact they are often recommended for people who have a poor credit history but can demonstate affordability (hence the reason they ask people to save with them first).

How much were you looking to borrow? How much have you saved with them over the last year?

Did they say why you were declined? was it based on affordability? do they have a maximum amount that you can borrow for the first loan (some unions do have)?

pinkypoopydoo

As I say, I already manage the minimum monthly payments on the debts, with extra being thrown to the highest interest debt every month. I gave proof that I could comfortably afford the loan repayments, even in a month with minimal work.

The only criteria they seem to have is that you have a minimum of 6 months savings with them, there's no requirement for a minimum amount. The minimum amount they allow you to save monthly is £15, I save more than that. When I initially started saving, I asked them about eligibility for loans, and was told I could apply after 3 months, but it would most likely be turned down, except in certain circumstances.

They have not given a reason for the refusal, but I have requested an explanation, which was replied to fairly quickly with the offer of their equivalent of a payday loan, which I have no interest in.

I realise that having money in savings, when you need to pay off debts is inadvisable, die to the pitiful amount of interest being paid, but I really wanted a cushion of cash building up, in case the car packed in, or the freezer gave up. However, I'm going to withdraw the balance out of the savings tomorrow, pay it towards a debt, and cancel the direct debit, so I can put everything I can into debt repayment.

MQ77

I am a member of a credit union. I started saving £100 a month with them, then after about 4 months applied for a loan of £1000 over 12 months, because the payments were less than the £100 I was saving with them regularly. They could see I could afford payments.

The £1000 is the highest amount they consider for a first loan.

At all times you must have at least 10% of the initial loan value in the account.

Perhaps you didn't have enough in your savings to justify the loan?

I have found the credit union to be a great help in my credit repair.