Credit Unions and Your Credit Score

Opening a checking or savings account with a credit union is a smart way to manage money and establish creditworthiness with a financial institution. If you are tracking your credit score, you may be concerned that opening an account may impact your credit score. 

How Do Credit Unions Impact Credit Score?

Overall, credit reports track debt to income ratios, on-time payments and how much debt you have on your credit cards in relation to your credit allowance.

If you have a credit union account, the following will not appear on your credit report:

·         Withdrawals or deposits

·         Closing an account

·         Check writing

·         Multiple Accounts

Two Instances Which May Impact A Credit Score

1.       Credit unions may pull your credit report when you first open an account. This could result in a soft pull which does not impact your credit score. A credit union may do a hard pull which is usually performed if you are applying for a loan. If a hard pull is done, this may impact your score for up to 12 months and may minimally reduce your credit score. 

2.       Check overdrafts are defined as a payment request coming through, but there are not enough funds to cover the payment. Typically, acredit union will cover the charge, but apply a fee for the overdraft. These do not appear on your credit report, if you bring your account to current and pay the fees.

Managing your credit report is essential for a future home, auto, or personal loan. Always ask questions to confirm your understanding to make the best financial decision for your financial goals.

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