How to start a credit union is a good endeavor during the difficult times of a financial crisis. Credit unions are covered under National Credit Union Administration (NCUA) and are characterized as an institution created by members under the same profession or within a defined locality. Here are some of the steps that would bring you closer to starting a credit union.
- Dig your common roots. Since a credit union is created by members of common interest, like that of the same profession or almost the same level of income, you would have to find that common interest. At the same time, this can be made by a definite locality, like those within your community.
- Call for potential members. You would need to get together and meet all the potential members of your community. There should be at least 3,000 potential members of the credit union. However, you would also need to check with state and federal law requirements. This can vary largely depending on which state you are in.
- Apply for a charter. The National Credit Union Administration (NCUA) issues charters to license the operation of a credit union. The Interpretive Ruling and Policy Statement 98-03 can be requested from the official website of NCUA. This is actually a re-draft of the NCUA's Chartering and Field of Membership Manual. Forms are provided with the steps required in your application to form a credit union.
- Create a reputable committee. The committees should be composed of members with excellent credit ratings. These credit ratings will be requested from the Credit Bureau. It is worth to note that those with bankruptcy records for the past seven years will not be allowed into the credit committee’s membership.
- Create a Board of Directors. As much as possible, create one that is composed of members from different fields if yours is a credit union which is not profession-based. Positive attributes to look for from members of the Board of Directors are those with strong backgrounds regarding finance, administration and management.
- Collect a membership fee. This would ensure that there is a source where you can already set up a start up cost. However, the credit unions usually only collect fees ranging from a dollar to about $25. This would also shoulder some amount for any license or miscellaneous fees that the credit union may incur.
- Sell shares to members. Each of the members should own at least one share in the union. The share may actually just be about $5 to $25. This would serve as the base for operation on loans as well as an addition to the other costs the union may possibly incur.