On This Page:
- Do Credit Union Cards Build Credit?
- Credit Score for Credit Unions
- Is It Worth Joining a Credit Union?
- FAQs About Credit Union Cards
- Do Credit Union Cards Build Credit?
- Credit Score for Credit Unions
- Is It Worth Joining a Credit Union?
- FAQs About Credit Union Cards
Updated: September 10, 2024
Advertising & Editorial Disclosure
Getting a credit union credit card and using it in the right manner can help improve your creditworthiness. While qualifying for a typical credit union card requires good to excellent credit, you may want to consider getting a secured card if you have poor or fair credit. Joining a credit union gives you other ways to improve your credit, one of which includes getting a credit builder loan.
On This Page:
- Does a Credit Union Credit Card Help Build Your Credit Score?
- What Credit Score Is Needed for a Credit Union Credit Card?
- Is It Worth Joining a Credit Union?
MoneyGeek's Takeaways
Making payments toward your credit union card on time may help improve your credit score.
Using a large part of your card’s credit limit may have an adverse effect on your credit score.
If you have poor or average credit, you may consider getting a secured credit union credit card.
Some of the links will take you to one of our partner's sites, where you can compare and apply for a selected credit card.
Does a Credit Union Credit Card Help Build Your Credit Score?
A credit union credit card helps you build your credit score just like any other credit card. When you make payments toward your credit union card, you can expect your card’s issuer to report your payment history to credit bureaus. Making your payments on time helps improve your credit score, and the converse holds true as well.
The amount of money you use from the total available credit of your credit union card also has a bearing on your credit score. For instance, if your credit union card has a credit limit of $5,000, of which you’ve used $4,000, its credit utilization ratio is 80%. However, if you’ve used just $1,000, the credit utilization ratio is 20%. If you wish to improve your credit score, your credit utilization ratio should be 30% or lower.
Secured Credit Union Cards
People who are unable to qualify for regular credit union credit cards may want to consider improving their credit scores by getting secured credit cards. You need to pay a security deposit to get a secured credit union card, which usually also doubles as your credit line. Credit unions report payments made toward secured cards to credit bureaus, thereby giving cardholders the ability to build their credit histories. Examples of secured credit union credit cards include:
- Rewards Secured Credit Card from Navy Federal Credit Union
- Secured Visa Card from USF Federal Credit Union
- Secured Visa Credit Card from America First Credit Union
- Secured Credit Card from USC Credit Union
- First Credit Union Visa Secured Credit Card
The Credit Union Advantage
Credit unions are run as not-for-profit financial cooperatives, which is why they place top priority on addressing the needs of their members. Since credit union credit cards typically offer lower interest rates and fees than banks, cardholders can use their money more effectively when repaying their credit card debts. By bringing down your outstanding balances quickly, you can expect a positive effect on your creditworthiness. Other benefits of joining a credit union include getting access to free online credit-building tools as well as credit counseling that might help you deal with different types of financial situations.
>>MORE: BEST CREDIT UNION CREDIT CARDS FOR BALANCE TRANSFER
What Credit Score Is Needed for a Credit Union Credit Card?
Qualifying for most credit union credit cards requires that you have good to excellent credit. However, some credit unions also provide cards for people with poor to average credit. For instance, while you need very good to excellent credit to qualify for the Visa Signature Flagship Rewards Credit Card from Navy Federal Credit Union, the More Rewards American Express Credit Card is available even for people with average credit.
If you have bad credit or have just started building your credit history, you may want to consider getting a secured credit union credit card. A number of credit unions across the country offer secured cards for their members. You need to pay a security deposit to get a secured card, and the same typically functions as your credit limit. You need to make regular payments toward the purchases you make using your card. The issuer of your card reports your payment history to credit bureaus, thereby giving you the means to build your credit score.
MONEYGEEK EXPERT TIP
Look for a credit union card based on eligibility criteria, annual fees, APRs and the possibility to earn rewards. We’ve put all the leading credit union cards through our unique ranking methodology so that you can select one with ease.
Is It Worth Joining a Credit Union?
There is more to joining a credit union than getting a credit card to improve your credit. Besides, unlike banks, most credit unions are willing to reconsider your application for a credit card if it’s denied the first time around. This is because credit unions usually look beyond credit scores and give their members opportunities to explain their financial situations. Your chances of approval increase if you’ve been a good, long-standing customer. Some credit unions even reconsider giving you a card if you agree to enroll in financial education classes.
Before deciding to join a credit union, take time to understand the possible pros and cons:
Pros
You gain access to different financial products such as credit cards, savings accounts, checking accounts, auto loans and mortgages.
Credit unions typically offer lower interest rates and fees than banks on credit cards and loans.
You typically receive better customer service than at large banks.
Cons
You might need to meet specific criteria to become a member.
Cross-collateralization might link all your credit accounts with a credit union together, although this is not always the case.
Not all credit unions provide 24/7 customer service.
MONEYGEEK EXPERT TIP
Credit unions used to be fairly restrictive about who was eligible for membership. Now, becoming a member is easier than ever. This gives more of us an opportunity to benefit from their low rates and fees. -- Lee Huffman, credit card expert at BaldThoughts.com
Other Questions You May Have About Credit Union Cards
Understanding the answers to other commonly asked questions about joining a credit union and getting a credit union credit card will help you make a well-informed decision.
Do credit unions raise your credit score?
Joining a credit union will not raise your credit score automatically. If you join a credit union to build credit, you need to handle your credit in the right manner. For instance, while it’s important that you make all your payments on time, it’s also crucial that you keep your credit utilization ratio at 30% or lower. The credit utilization ratio refers to the amount of money you’ve used compared to your total available credit.
Does joining a credit union build credit?
Joining a credit union can help build credit, provided you follow the right steps. For example, if you join a credit union with bad credit, you may want to consider getting a secured credit card to improve your credit score. This is also an option if you’re new to credit.
Can anyone join a credit union bank?
It is common for credit unions to restrict membership to specific communities. For instance, Navy Federal Credit Union offers membership primarily to serving and retired members of the armed forces and their families as well as to personnel from the Department of Defense. A number of credit unions have community charters, which opens up membership for anyone residing, working, going to church or attending school within a predefined geographic area. As long as you’re within the scope of a credit union’s membership criteria, you may join. You can look for credit unions in your vicinity by using a simple online tool provided by the National Credit Union Administration.
Do credit unions report to credit bureaus?
Yes, credit unions report payments made toward credit cards and different types of loans to credit bureaus.
How do you add a credit card from a credit union?
Start by becoming a member of the credit union through which you want a credit card, provided you meet its membership requirements. The next step is to apply for the credit card in question. Remember that your application for a new card is subject to approval.
Next Steps
Now that you know of benefits that credit unions have to offer and how credit union credit cards can help build credit, consider becoming a member of one based on eligibility criteria and the cards on offer. To select a suitable card, compare your options against parameters such as fees, interest rates, rewards and added features.
Learn More About Credit Cards
Members of the MoneyGeek editorial team aim to answer all our readers’ questions about how credit cards work, how to improve credit scores and how to choose suitable credit cards quickly and accurately. They do this by staying up to date on all the changes that take place in the credit card market.
About Doug Milnes, CFA
Doug Milnes is a CFA charter holder with over 10 years of experience in corporate finance and the Head of Credit Cards at MoneyGeek. Formerly, he performed valuations for Duff and Phelps and financial planning and analysis for various companies. His analysis has been cited by U.S. News and World Report, The Hill, the Los Angeles Times, The New York Times and many other outlets.
Milnes holds a master’s degree in data science from Northwestern University. He geeks out on helping people feel on top of their credit card use, from managing debt to optimizing rewards.
sources
- Navy Federal Credit Union. "Visa Signature Flagship Rewards Credit Card." Accessed November 8, 2021.
- Navy Federal Credit Union. "More Rewards American Express Credit Card." Accessed November 8, 2021.
- National Credit Union Administration. "Credit Union Locator." Accessed November 8, 2021.
- CuCollaborate. "Community Credit Union Charter." Accessed November 8, 2021.
*Rates, fees or bonuses may vary or include specific stipulations. The content on this page is accurate as of the posting/last updated date; however, some of the offers mentioned may have expired. We recommend visiting the card issuer’s website for the most up-to-date information available.
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