Credit Union membership
- kickstarting your credit history

Becoming a member of a credit union is one of the best ways to kickstart your credit history, if you're new to America. It worked for me personally, and I know of several friends and associates, for whom it worked equally well.

A credit union is a financial institution that performs most retail banking functions - including holding deposits and giving out loans and credit cards. It differs from a bank in the way it is owned. A credit union is a "co-operative" that doesn't have external shareholders - instead, it is jointly held by all its members. Thus, by definition, it is a non-profit organization. Any profits made are distributed back to members in the form of dividends or lower fees and interest rates.

Opening a checking and savings bank account in a credit union is a great first step towards building your credit history. Applying for a credit card is the next step - credit unions are typically more prone to consider your lack of credit history sympathetically, and approve your credit card application. If they yet refuse to give you a credit card, they are sure to give you a secured credit card. A secured credit card requires a cash collateral and gives you a credit line against that collateral only. All the same, it triggers the contribution to your credit score.

So how does one become a member of a credit union?

Each credit union has a 'field of membership' as outlined by its charter. This defines the criteria for membership, and differs between credit unions. No credit union can discriminate on the basis of gender, color, race or economic status. Criteria usually pertain to a community or geographic area or employment with a company that sponsors or patronizes the credit union.

So your best bet is to check with your employer. There is a high likelihood they have a tie-up with one or more credit unions, and that would give you the right to apply for membership.

If your employer does not have a tie-up, or if you are self-employed, check with friends, neighbors or relatives. Many credit unions allow extended family or referrals from existing members to apply for new membership.

If that also does not work out, contact the credit union league representative in your state. You will be able to get guidance on the credit unions in your area, and the way to obtain membership.

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