CHICAGO (6/17/15)--A CUNA expert provided insight on how credit unions are helping consumers establish or repair their credit with credit-builder loans in a recent CreditCardGuide.com article.
One out of five credit unions offer credit builder loans, and the average loan balance is $1,146, the article reported, citing CUNA statistics.
One of the most important aspects of such loans is that as the lender reports payments to the credit bureaus, the borrower’s credit improves. “Down the road, the hope is that this person would have a relationship with the credit union and be able to get a mortgage or an auto loan,” Michelle Dosher, CUNA managing editor for consumer education, told CreditCardGuide.com.
Credit unions are the primary financial institutions that offer credit-builder loans, and with more than 6,000 credit unions in the United States, virtually every consumer is eligible to join one.
Dosher suggested consumers meet with staff at a credit union to find their best loan option and ask questions. For instance, is a co-signer required to take out a credit-builder loan? Also, interest rates and repayment terms may vary with the borrower’s circumstances and credit history.
Borrowers also must make timely payments, to be sure credit-builder loans work in their advantage. Borrowers should also check with their credit union to verify that they are reporting payments to credit bureaus so the borrower’s credit improves.