CREDIT UNION vs. BANK
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A credit union is a not-for-profit financial institution that is owned by the people who belong to the credit union. Its members are made up of people who share a common bond or affiliate, such as belonging to the same church, school, employer, organization or community.
Since every member is an equal owner and therefore shares a common bond with the other members, the personal experience tends to be much better at a credit union. As co-owner, the credit union works for you to make sure you are happy and have an enjoyable experience. According to Bankrate.com, “Credit unions have topped the consumer satisfaction ratings in American Banker’s annual survey for 12 years in a row.”
Since a credit union’s primary focus is its people, or co-owners, they are more concerned about making you happy than turning a profit. As a result, credit unions typically offer more educational services and seminars to teach you about all financial products so you can make the best decision. Banks, on the other hand, may be more inclined to recommend only those products that bring in higher corporate profits.
As a not-for-profit organization, credit unions have many advantages over banks. They are exempt from most state and federal taxes, do not have many marketing costs, or high salaried executives. This allows credit unions to pass on great rates to their members, including:
Higher Interest Rates on Savings Accounts Lower Rates on Auto Loans, Mortgages and Credit Cards Free Checking Accounts Lower or No Penalties for Overdrafts and Late Payments
Your money is also just as safe as with a standard bank since up to $100,000 of your cash is insured and regulated by the National Credit Union Association, which is the same as the Federal Reserve Bank’s coverage.
Anyone in the U.S. can join a credit union. Use www.findacreditunion.com to help you do your credit union search.
Banks, on the other hand, are publicly traded, for-profit organizations. Unless you have a personal banker, you generally will not receive the same level of service and satisfaction as you would from a credit union. Rates, fees and penalties will undoubtedly be higher too, but these inconveniences may be outweighed by the benefits.
Banks will have a much larger selection of products for you to choose from, including retirement plans, stock investing programs, and other services not offered by credit unions. Secondly, banks can offer more convenience with more ATMs and more branches, and it is as simple as walking in the door to join.
So when deciding between a bank and a credit union, you have to think about your goals and personal needs. If you want better rates and more personalized service, go with the credit union. If convenience is your number one criteria then stick with a bank for your personal banking needs.
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What are inquiries and how do they affect my FICO score?
Credit inquiries are requests by a "legitimate business" to check your credit. As far as your FICO score is concerned, credit inquiries are classified as either "hard inquiries" or "soft inquiries" Only hard inquiries have an effect on your FICO score.
Soft inquiries are all credit inquiries where your credit is not being
reviewed by a prospective lender. These include inquiries where
you're checking your own credit (such as checking your score in my FICO).
Credit checks made by businesses to offer you goods or services (such as promotional
offers by credit card companies), or inquiries made by businesses with whom you already have a credit account.
Hard Inquiries are inquiries where a potential lender is reviewing your credit
because you've applied for credit with them. These include credit checks when you've applied
for an auto loan, mortgage or credit card. Each of these types of credit checks count as a single
inquiry. One exception occurs when you are "rate shopping". That's a smart thing to do, and your FICO score considers all inquiries within a 45 day period for a mortgage, an auto loan or a student loan as a single inquiry.
This same guideline also applies to a search for a rental property such as an
apartment. These inquiries are usually recorded by the credit bureau as a type
of real estate-related inquiry, so the FICO Score will treat them the same way. You can avoid lowering your FICO Score by doing your apartment hunting within a short period.
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