Credit-builder loans from CUs boost members' credit files
April 27, 2015
MADISON, Wis. (4/28/15)--A recent article on CreditCards.com highlighted how credit unions offer credit-builder loans to help consumers establish or boost their credit profile.
Credit-builder loans usually are offered in modest amounts, typically ranging from under $500 to $1,500, to consumers who need credit help, but have their financial situation under control.
About one in five credit unions offer credit-building loans to members, Mike Schenk, CUNA vice president of economics and statistics, told CreditCards.com.
Achieve FCU, Berlin, Conn., was noted for its standard secured loan, which is secured by a savings balance. The loan features an annual percentage rate (APR) of 12%. The collateral account is frozen, and funds are released incrementally as the loan is paid down.
St. Mary's Bank, a Manchester, N.H.-based credit union, offers an unsecured credit-builder loan for a maximum of $500 for 12 to 24 months and a 7.74% APR with payments made by automatic funds transfer. If the member pays off the loan as agreed, the interest is refunded.
Greater Iowa CU, Ames, Iowa, requires a borrower to have been a member for at least three months, to have six months at either their current job or residence, and to have no recent checking overdrafts in order to take out a credit-builder loan. Interest rates vary, but tend to be lower for secured loans and slightly higher for unsecured loans, Alan Johnson, Greater Iowa CU senior lender, told CreditCards.com.