Sharon McDougall - Updated - 2nd February 2024 - 2 minutes to read
Credit unions in Scotland provide services to more than 375,000 people and one in 20 Scottish residents are members.
Credit unions are an alternative way to build savings, or take out affordable loans. If you have a bad credit rating and are considering taking out a personal loan to consolidate your debts, a credit union is more likely to accept your application than a bank. Credit unions look at your personal situation too, rather than just your credit rating.
A credit union is a ‘not for profit’ organisation. Instead of shareholders obtaining a profit, money made by a credit union is spent on improvements to the services and rewards for their members.
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How can you join a Scottish credit union?
To become a member of a credit union, you must share a common bond with other members, such as working for the same employer or living in the same area.
There are over 100 credit unions currently operating in Scotland, with around £200m in savings and £170m presently loaned to customers. Recently, the Scottish government’s Third Sector Enterprise Fund invested more than £1.3m into Scottish credit unions, which improve services and also encourage them to thrive and expand their customer base. Credit unions are also regulated by the Financial Services Authority, to ensure your money stays safe.
When you take out any loan, often there are hidden charges. If you’re lucky enough to be able to pay the loan back in full before the end of the agreed term, there are often penalties too. Borrowing from a credit union is different: there are no penalties for paying a loan early and no hidden charges either. Interest rates can vary, so if you’re unsure, it’s best to speak to a financial advisor before committing to anything, who, if it’s right for you, can then advise on how to apply to a credit union.
Usually, the length of a loan with a credit union is around five years (unsecured) or ten years (secured). For more information on what constitutes a secured or unsecured loan, why not contact our friendly, impartial team at Scotland Debt Solutions for confidential advice on what type of loan suits your personal situation.
As well as loans, credit unions offer a range of savings packages, which allow you to save as little or as much as you like. Because credit unions are not run by profit-making shareholders, any money made from your savings benefit people just like you, often through yearly dividend payments.
So if you’re looking for a way to consolidate your existing debts into one loan, but your credit rating is holding you back, why not speak to our qualified experts about credit unions today as a possible solution to your debt problems.
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