How Credit Unions Can Assist in Building Your Credit

Like any other financial institutions that provide loans, credit unions also offer loans. In that sense, credit unions can help build your credit - if you actually borrow from them. However, the real assistance comes from your own actions rather than from the credit unions themselves. It is ultimately up to you to build your credit by making timely payments, regardless of whether you borrow from credit unions or other institutions.

Types of Loans That Can Help Build Your Credit

The key to building your credit through credit unions lies in the types of loans you take out. Only when you borrow funds from credit unions, such as car loans, personal loans, credit cards, or mortgages, can they help build your credit. However, opening a savings account, no matter where you do it, won't help your credit score - paying back debt will.

What Helps and What Doesn't Help Build Your Credit

Building credit involves getting loans or credit cards. It may also include buying something on credit, which often results in a merchant opening a credit account in your name and reporting it to credit reporting agencies. Various actions generally do not contribute to building your credit, unless you use services like 'credit boost,' which may not be ideal. These include:

Paying rent Utilities: electric, gas, water, etc. Cell phone plans Payday loans: these do not typically report your account on a consistent basis.

Each of the aforementioned actions can harm your credit score but cannot help improve it.

Credit Unions and Building Credit

Credit unions can help you build your credit if you:

Apply for and receive a credit card Apply for and receive other loans such as car loans, signature loans, or mortgages Get a "share secured" loan, also known as a credit builder loan

While credit unions generally offer better terms for most loans, there is no guarantee of this. It is highly recommended to shop around, especially when considering a mortgage, as banks may not offer signature loans (a.k.a. personal loans) at all.

In conclusion, while credit unions can play a crucial role in building your credit through loans, it ultimately depends on your own financial behavior. Timely payments and consistent borrowing from reputable financial institutions are key to a healthy credit score.