We all know what credit unions are, but what are ‘hometown’ banks. Hometown banks are a term I coined that describes banks that are located in your community. You will not find your credit union and hometown banks located across the country, they are right in your back yard. What is so great about credit unions and hometown banks?
For starters credit unions and hometown banks offer more tools that rebuild your credit score than national banks. They also offer low-cost secured loans, free credit counseling and some offer free online debt courses. Remember credit unions are member-owned, which means they would be more apt to help members to improve and/or establish credit. So, if you do not belong to a credit union, it may be time to join.
Secondly, most credit unions and hometown banks are more likely to approve credit builder loans; loans that are designed to rebuild your credit over time. Credit builder loans can range from $500 – $4,000 depending on the financial institution. Loans rates vary, be sure to check the fine print if you decide to go this route. While you pay on credit builder loans, your good payment history is reported to the big three credit reporting agencies (Experian, Equifax & TransUnion) on a monthly basis.
Many credit unions and hometown banks offer unadvertised, free credit counseling. Be sure to ask your banking institution if they offer any of these services, chances are they do. Normally, three credit counseling sessions are offered at no charge. Three is usually all you need. One of the counseling sessions may include cash flow analysis. If this is not included, you can always ask for it. I highly recommend it. Most consumers do not understand their financial situation; the cash flow analysis can be a much needed eye-opener.
Keep in mind that higher credit scores can translate into lower interest rates. You probably are wondering why credit unions and hometown banks are offering these services. For starters, they share the same commitment to the community as you do. Chances are those who operate and run credit unions and hometown banks reside in the area, same as you. They are also taking on more of a consultant role instead of charging their members high fees for these much needed services. All consumers have a desire to be healthy, financially. Credit unions and hometown banks want financially healthy members. It is a win-win partnership.
A huge part of our credit scores are calculated based on our payment history. Applying credit improvement strategies raises credit scores. Higher credit scores mean lower interest rates on car loans, mortgage, home improvement loans, credit cards, etc.
Barbara Peterson is owner of CBC Associates collection agency and the founder of Peterson Sewing School. She is a Certified FDIC Money Smart Instructor as well as a Certified FDIC Train the Trainer Instructor. Barbara also has over 25 years credit and collection experience.