A credit union is a suitable place to apply for a loan. They offer favourable terms, primarily in lower rates and fees. In many cases, applying for a credit union loan is easier to qualify for if you’re someone with bad credit compared to applying through a traditional lender such as a bank.

If you have never done business at a credit union before and are curious about credit union loan requirements, here is the information you need to know.

Credit Unions Have Varied Loan Requirements

Not all credit unions are the same, much like banks. Each may offer their loan products and have differing loan requirements.

Credit Unions Offer Many Types of Loans

Credit unions can offer personal loans, personal lines of credit, home equity lines of credit, car loans, mortgages, and credit cards. A credit union may have different loan requirements depending on which type of lending product you want.

Become a Credit Union Member

One must first become a credit union member to receive a credit union loan. The exact requirements can be very specific. There are many types of credit unions, some requiring their members to live in a specific area, work in a specific industry, or be required to meet other criteria.

Credit Union Membership Fee

Many credit unions require an upfront fee when you register as a member. This is an investment in shares that allows you to become a member-owner and vote on issues affecting the credit union. The fee is non-negotiable for the credit unions that use it.

Must Be a Canadian Resident And Of Age

To apply for a credit union loan, you must be a resident of the province where the credit union is based. Furthermore, you must also be at least 18 years of age to apply for membership at a credit union and, in turn, at least this minimum age to be approved for a loan.

Have Strong, Reliable Employment

Just like in applying for a loan at a bank, a credit union loan requires you to be employed. You may be required to have been employed at the same company for a certain amount of time or face other standards to prove stability.

Demonstrate the Ability to Repay

You need income to qualify for a credit union loan. If you cannot show adequate income to support repayments every billing cycle, you cannot expect to be approved for a loan amount.

Favorable Debt-To-Income Ratio

Any credit union will want to know how much debt you carry and how much of your current income is dedicated to paying it off. Your debt-to-income ratio should demonstrate as little debt as possible.

Ideally, no more than half of your income should be put towards monthly debts and bills. Anything more is a sign that you may need to work on either increasing your income or lowering your debts.

Required Down-Payment

If you are applying for a mortgage or similar type of loan, a down payment is required at a credit union, just like with a bank.

Credit History Is Relevant

A credit check is required to verify an applicant’s creditworthiness. While you can most definitely obtain a credit union loan with bad credit, still expect your credit history to be checked.

Ideally, credit unions want a healthy credit score and a strong credit history. Whatever your credit history, this will play a key role in deciding your bill payments.

Submit a Formal Credit Union Loan Application

A formal credit union loan application has to be filled out when applying for a loan. With this paperwork will be government-issued photo identification of you, proof of residence to verify your address, your employment details, and income proof. The credit union may stipulate further requirements.

Ways You Can Improve Your Loan Approval Chances

If you’re unsure about getting approved, you may consider either or both strategies to go above and beyond the credit union loan requirements.

Offer collateral.

An unsecured loan is more difficult to get approved. With a secured loan, with collateral, you stand a better chance of getting a lower interest rate, better terms, and approval. Consider your car or home equity for collateral.

Use a co-signer who is already a member.

If your income or credit is not in the right place, use a co-signer with a strong income and good credit. This minimizes the credit union’s risk and increases the likelihood of loan approval.

Wait Time for Credit Union Loan Approval

There may be a wait time for loan approval. If you are not a member, a membership needs to be processed. After that, a loan can be applied, and approval may be delayed. This makes it imperative to begin the process as early as possible. Ensure you provide the information requested to fulfill credit union loan requirements to speed up approvals.