The Value of American Credit Unions
Following the collapse of the housing market, mortgage foreclosures affected a large portion of the American populace, leaving them with poor credit and outstanding debt. Without solid footing with the banking institutions, they had little recourse for additional loans or credit applications. Additionally, students still paying off loans, or young people just starting out in the work force have little to no credit. For them, the most practical outlet was joining a credit union.
The American Credit Union differs from a bank in that it is a member owned co-operative. Termed as a not-for-profit institution, the margin of actual profit is limited to the amount needed to expand services and cover risks. Although credit unions are locally loaned, many, such as Credit Union 1, have merged to form branches in a number of states, much like the branches of a leading bank.
Credit Union members are able to build up their credit scores and reputations for being solid credit risks through their participation and sensible handling of credit. In recent years, the mortgage industry has also begun recognizing and rewarding cooperative members’ sensible handling of credit.
Mortgage interest is not a fixed rate through credit unions. The pricing option for a loan mortgage reflect the debt to income ratio, geography and credit scores, all of which are predictive to the borrower’s interest rates. Members with solid credit history save money when procuring loans as they are not subsidizing borrowers with poorer credit quality or a greater number of risk factors.
As the US housing market continues to recover from the recession, credit unions have provided a stable solution for those seeking to establish a solid credit history and apply for loans to improve their quality of life. Risk based pricing has now become standard for many lenders through a variety of online options, including direct or web based connections and product and pricing engines. For those who have struggled to acquire a good credit rating, Credit Union 1 has become one of the most sensible solutions. Their loans will be based on the credit scores acquired and determined through their membership within the union.