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Members are encouraged to maintain their Fresh Start Loan for the full term in order to establish a meaningful payment history and improve their credit.

Limit one loan per member. If you make your payments on time for at least 6 months, you’ll also be eligible for a minimum $500 credit card.

If you need a loan and don’t have a credit history at all, our First Time Borrower Loan would likely be a better fit for you.

Fresh Start Loans FAQs

Q: How does a fresh start loan work?

A: Fresh start loans, also known as a credit builder loans, are loans designed to build credit. Securing a personal loan with bad credit can be difficult. But, a fresh start loan makes it possible for those with less-than-ideal credit histories to get a loan and build their credit.

When you borrow with a fresh start loan, the funds for which you’ve been approved are held in a bank account while you make regular monthly payments with a fixed interest rate. Once you have fully repaid the loan, you can access the money.

This system benefits both borrower and lender, since the borrower is able to build their savings and their credit score at the same time, while the lender is protected from risk.

As you’re making payments, your financial institution sends reports to one or more of the three credit bureaus (Equifax, Experian, and TransUnion), who then use those reports to build your credit score.

If you have no credit history or a bad credit score, making timely, adequate payments is crucial so you can improve or build a credit history. Boosting your credit score will make you eligible for other bigger loans and help you qualify for lower interest rates in the future. This is because lenders consider borrowers with higher credit scores a less risky investment.

Q: What does a credit score indicate?

A: A credit score is a summary of credit report info represented as a 3-digit number at the moment the score is requested. This calculation estimates a consumer’s willingness and ability to repay a debt based on previous behavior. The higher the credit score, the less risk the creditor assumes. The less risk the creditor assumes, the better your rate and term options are for either installment loans or credit cards.

When you pay higher interest rates due to bad or less-than-stellar credit, the lifetime cost can be huge and add up quickly. You could end up paying tens or hundreds of thousands of dollars more on mortgages and auto loans than someone with better credit.

Q: Why is my credit score important?

A: A good credit score matters for more than your ability to take out future loans. Your credit score has wide-ranging impacts on your life.

• Employment. Federal legislation allows employers to conduct credit checks of potential employees, although some states have restrictions. So if you’re applying for a job, you may find that your employer wants to run a credit check on you. Employers like to know your credit history to determine how trustworthy you are.

• Your car. Unless you’re able or planning to pay cash for a car, you will likely need an auto loan to purchase a vehicle. When you apply for a car loan, your credit score plays an important role, just as it does when you apply for a credit card or any other loan for that matter.

  The kind of car you can drive depends on the kind of loan you can afford to get. The amount of your loan and your interest rates will depend a lot on your credit score. Buying a car with less-than-perfect credit can be expensive. You’ll pay a higher interest rate, which means your monthly payment will be higher and you could end up paying thousands in interest over the life of the loan.

  You may be also surprised to find out they can also affect your car insurance premiums much the same way your driving record, marital status and payment history can. Many U.S. auto insurance companies use credit-based insurance scores to help determine risk when providing insurance quotes.

• Where and how you live. Potential landlords often check applicants’ credit. They want to make sure you’re current on accounts or can explain any lapses in paying rent, so your credit history could make a big difference in your next apartment.

  Likewise, home loan lenders will look at your credit score to determine your interest rate, which will in turn impact your monthly mortgage payments. You need affordable mortgage payments to live where you’d like to live.

  Even utility companies will often run a credit check before turning on your electricity. Because utility companies assert that you are borrowing electricity from them on a monthly basis, they want to know you’re a trustworthy borrower.

  Utility services that may look at your credit score include water, cable, internet, electricity, and even cell phone providers.

  Good credit will help you live where and how you want.

Q: What is a good credit score?

A: Lenders want borrowers who will repay their debts on time. If a lender feels they can rely on you to do that, they say you have “good credit”. Each lender sets its own standards and common credit tiers range from poor, fair, good, very good and excellent. In general, a credit score starting around 680 is considered to be a good credit score. People with scores in this range are likely to qualify for a broad array of loans and credit cards, but are likely to be charged interest rates somewhat higher than the best available. 730 or higher usually puts you in the top tier where lenders consider you a very low-risk borrower and where you may qualify for the best interest rates.

Q: What are some good habits to build good credit?

A: In addition to a fresh start loan, there are certain good practices and habits you should develop to build your credit and improve your credit score.

• Pay bills on time helps to build a solid credit history
• The amount of debt owed versus how much credit is available to you affects your score. Therefore, Keep credit card balances as low as possible and limits as high as possible
• Use credit cards, but sparingly, not exceeding 30% of your credit limit
• Pay your balances in full
• Do not close credit cards after you’ve paid them off as your available credit (capacity) may decrease
• Move revolving debt (credit cards) to “installment debt” (fixed payment loans)

Q: What are the benefits of applying through TEG Federal Credit Union?

A: At TEG Federal Credit Union, it’s about so much more than money. We know that the road of life can be bumpy, so we offer a Fresh Start. Fresh start loans can be difficult to find at traditional banks but our goal is to find solutions that help every member get to a better financial position.

As a member-owned, not-for-profit financial cooperative, we return our profits to members, not stock holders, in the form of lower loan rates and higher savings yields.

When it comes to lending, each lender may view the same credit score differently. At TEG your credit score is not the only factor in a decision to extend you credit. We want to hear your story and promise to look at the whole picture.

We offer FREE credit report reviews. Come talk to us about how we can help you save money and get you back on track with affordable financial solutions. If we aren’t able to help you with larger loans right away, we’ll work with you on a plan so that we can help you in the very near future.

You don’t need to be a TEG Federal Credit Union member to apply for a loan. However, you will need to become one when and if you are approved.

Membership requirements are simple: anyone is eligible who lives, works, goes to school, or worships in Dutchess, Ulster, Orange, Putnam, Sullivan, Westchester, or Rockland Counties. Immediate family members of TEG are also eligible.

A simple $5 deposit is all it takes to get started on a TEG membership.