Everything You Need To Know About Getting a Signature Loan From a Credit Union

When you need access to extra cash for things like debt consolidation home repairs, medical bills or other major expenses, a personal loan can be a good option. And getting your loan from a credit union can have some nice advantages compared to banks or online lenders. In this comprehensive guide, we’ll explain what you need to know about credit union signature loans, including how they work, benefits, qualification requirements, and tips for getting the best rates and approval.

What is a Signature Loan?

A signature loan is a type of installment loan that is given based on your credit profile and ability to repay, rather than requiring collateral. It is called a “signature” loan because you only need to provide your signature promising to repay the loan as agreed. The funds can be used for nearly any purpose.

Credit unions and banks commonly offer signature loans up to $15,000 or $30,000. Terms are usually between 1-5 years. You’ll repay the loan in fixed monthly installments with interest until it’s paid off.

How Do Credit Union Signature Loans Work?

Here is an overview of the signature loan process when getting one from a credit union:

• You complete a loan application either online, over the phone or in branch. You’ll provide personal information and requested loan amount.

• The credit union reviews factors like your income, credit score, debts, and employment to make a loan decision.

• If approved, you get a loan offer outlining the interest rate, fees, term length, and other conditions.

• Once you accept the offer, the loan funds are immediately deposited into your credit union account.

• You’ll make fixed monthly payments over the repayment term until the loan balance is paid off Extra payments can be made to pay off the loan faster.

Interest rates on credit union signature loans are typically lower than banks and other lenders. Credit unions are member-owned nonprofits aimed at providing affordable financial services.

Top Benefits of a Credit Union Signature Loan

There are several advantages to getting your personal loan from a credit union versus other sources:

• Lower interest rates – Credit unions offer below average rates, which saves money over the loan term.

• Better approval chances – Credit unions emphasize relationship lending over credit scores. Your history with them boosts approval odds.

• Flexible terms – Credit unions may offer longer repayment periods than other lenders.

• Member service – You can get guidance from credit union staff who understand your full financial picture.

• Nonprofit mission – Credit unions aim to be affordable and benefit members, not make profits.

• Convenient access – Easy to apply and make payments since loans are handled directly through your credit union.

What Credit Score is Needed?

Each credit union will have their own minimum credit score requirements for signature loan approval. Most look for scores in the 660-680 range and above. Excellent credit over 720 will qualify you for the lowest interest rates.

Other aspects like your income, credit history length, existing debts, and relationship with the credit union also factor in. Those with limited credit history may need to build up their score first before qualifying.

How Much Can You Borrow?

The maximum you can borrow with a credit union signature loan usually ranges from $15,000 up to $30,000. Those with lower incomes or credit scores will likely have lower loan maximums approved. The amount offered can also depend on the credit union’s lending policies.

Getting pre-qualified first without affecting your credit score is recommended. This gives you an estimated approval amount and rate offer to inform how much you apply for.

Tips for Getting the Best Rates and Approval

Follow these tips when applying for a credit union personal loan to maximize positive results:

• Check your credit reports – Review all three reports and correct any errors that could be dragging your score down.

• Lower credit card balances – Having high balances close to your limits can negatively impact your debt-to-income ratio. Pay down balances to under 30% of your limits.

• Build your relationship – Having a long history with the credit union in good standing can help your case.

• Bring supporting documents – Paystubs, tax returns, and bank statements prove your income sources and assets.

• Explain any credit issues – Be ready to provide context for late payments, collections, or other negatives on your history.

• Consider a cosigner – Adding a cosigner with better credit may help you qualify and get a lower rate if you have limited credit.

Alternatives to Explore If Denied

Don’t get discouraged if you don’t qualify for a credit union signature loan on your first try. Here are some alternative options to consider:

• Ask the credit union for tips on improving your credit to qualify in the future. Staying on their radar shows you are serious about building a relationship.

• Explore secured loan options that require you to put up an asset like a CD account as collateral. This lessens the risk to the credit union.

• Look into loans from online alternative lenders who offer more flexible underwriting. Rates are higher but approval may be easier.

• See if you qualify for a credit builder loan to establish positive payment history that can boost your future approval odds.

• Get added as an authorized user on a family member or partner’s credit card account to benefit from their good history.

• Build savings to be able to make a larger down payment on a purchase to reduce how much financing you need.

How to Find the Best Credit Union Signature Loans

Choosing the right credit union is key to getting the best signature loan experience. Here are some tips on where to look:

• Your current credit union – Already being a member gives you an advantage. Check their personal loan options first.

• Local community credit unions – Well-established regional credit unions often have great borrowing programs and competitive rates.

• Online credit unions – National credit unions like Alliant, Digital Federal Credit Union, and others provide online loan applications.

• Credit union search tools – Websites like MyCreditUnion.gov and FindACreditUnion.com help locate options nationwide.

• Employee credit unions – See if your employer, industry, or military branch has an affiliated credit union you can join.

Getting pre-qualified by multiple credit unions is recommended. Comparing loan offers lets you find the best all-around package of low rates, fees, and flexible terms.

The Bottom Line

For an affordable loan experience with more flexible approval requirements, credit union signature loans are an excellent financing choice. Make sure to have a solid credit profile, manageable debts, and steady income stream before applying. Establishing an ongoing relationship with a credit union early on can open up more borrowing options when funds are needed. Consider both local community and larger national credit unions to find the right lender for your loan needs and financial situation.