How to Build or Rebuild Credit with a Credit Union Loan
There’s unfortunately no quick fix for building or rebuilding credit. Borrowers need to use the right financial tools responsibly and develop consistent habits to make a significant impact on their score. The good news is that consistent, incremental progress is often achievable, even without drastic budgetary sacrifices.
At Ouachita Valley Federal Credit Union, members have access to loan products and resources designed to make building and rebuilding credit easier and more sustainable.
Credit Cards
Every month you make an on-time payment, that activity is reported to the credit bureaus, strengthening your record. This monthly opportunity to show lenders that you can be trusted is what makes credit cards such a powerful financial tool for establishing or rebuilding credit.
Credit cards can be dangerous for the same reason. Misusing a credit card or carrying a high balance can damage credit quickly.
If you want to use a credit card to improve your credit, try to:
Fully pay off your balance each month, if possible. If you carry a balance, always pay at least the minimum on time each billing period.
Keep balances well below the card limit, ideally under 30% of available credit.
Avoid carrying a balance you can’t pay off in a reasonable period.
Used this way, an OVFCU credit card is one of the most dependable tools for improving your credit.
Secured Loans
For members who may not qualify for an unsecured loan yet, OVFCU offers savings-secured and CD-secured loans. These loans use the funds you already have in savings or certificates as collateral, reducing the risk to the credit union and making approval easier.
Savings- and CD-secured loans provide several credit-building or rebuilding benefits:
Payments are reported to credit bureaus just like any other installment loan.
You continue earning dividends on the funds securing the loan.
Flexible terms give you a chance to establish a positive payment history without overextending.
They encourage borrowers to save more and avoid situations where they may need to rely on high-interest credit cards in an emergency.
Small Personal Loans
OVFCU’s unsecured signature loans give members another option for establishing installment loan history. Because they’re not tied to savings or a CD, unsecured loan approval is based on credit and income, but these loans remain accessible for many members.
A small personal loan can be especially helpful for debt consolidation. Paying off multiple high-interest credit cards with one fixed-rate signature loan can simplify your monthly budget and improve your credit utilization ratio.
The key is to borrow an amount that fits comfortably into your monthly budget, ensuring you can make consistent payments without strain.
Auto Loans
For many members, an auto loan is the first major installment loan they take on. Auto financing can be more attainable, even for those building or repairing credit, because the vehicle secures the loan.
Timely payments on an auto loan demonstrate to credit bureaus and future lenders that you can handle larger financial responsibilities. Over time, this repayment history helps diversify your credit mix, which is another factor used to calculate your score.
Credit Sense
There’s more to improving credit than just qualifying for loans and making on-time payments. Knowledge and consistent monitoring can be equally important, especially at the beginning of your credit repair journey. That’s why OVFCU offers Credit Sense, a free program available through our online banking and mobile app.
With Credit Sense, members can:
Access their credit score anytime at no cost.
View monthly credit reports.
Receive personalized tips for improvement.
Get alerts about suspicious activity.
Use educational tools to understand how scores are calculated.
Because Credit Sense uses a soft inquiry, checking your score through the program won’t affect it. That makes it a safe, convenient way to track your progress while you put credit-building strategies into action.
Good Habits That Help Build and Safeguard Credit
No matter which OVFCU product you use, good financial habits are ultimately what turn goals into reality. Focus on:
Paying on time: Payment history is the single biggest factor in your credit score.
Keeping balances low: High revolving balances relative to your limits can drag your score down.
Limiting new accounts: Too many applications in a short time can signal risk.
Monitoring reports: Checking your credit for errors ensures mistakes or fraud do not hold you back.
We’re Committed to the Financial Health of Every Member in Monroe and Ouachita Parish
Ouachita Valley Federal Credit Union is invested in helping Ouachita Parish residents achieve and maintain a solid financial footing. With products like secured loans, credit cards, personal loans, and auto loans, plus free tools like Credit Sense, OVFCU gives you the resources that make building or rebuilding credit an achievable goal.
You can learn more about membership and our lending products by calling us at 318.387.4592.
