DACA-Friendly Credit Unions And The Dreamer Loan Program
The Deferred Action for Childhood Arrivals, DACA, is a policy that allows young people, called DREAMers, who were unlawfully brought to live in the U.S. as children, to stay, hold a driver’s license or State ID (for non-drivers), apply for a Social Security number, and work permit.
That means DREAMers can work in the U.S., which means they’ll need a bank or credit union so they can open a checking account. A checking account makes it easier and less expensive to deposit or cash checks, including paychecks, pay bills, and transfer money to family members and friends.
The application to become part of the DACA program is costly, $495, and must be renewed every two years. Each renewal also costs $495. But there is something called the Dreamer Loan program that DACA-friendly credit unions and banks offer to help with those costs.
We’ll explain the differences between credit unions and banks, the Dreamer Loan program, and how DACA recipients and other immigrants can build credit in the U.S.
Differences between credit unions and banks
The key difference between credit unions and banks is that credit unions are not-for-profit entities while banks operate on a for-profit basis. The credit union members are part-owners, and the credit union is run by a volunteer board of directors who members elect.
Both credit unions and banks typically offer the same services, checking and savings accounts, loans, and other financial products. But credit unions often provide some important benefits over banks, especially for immigrants, including:
More personalized service
More flexible requirements
Lower or fewer fees
Higher interest rates for checking and savings accounts
Lower interest rates on loans
Financial literacy programs
Specialized products for immigrants
The Dreamer Loan program
Some DACA-friendly credit unions and DACA-friendly banks offer something called the Dreamer Loan program. The loans cover the fee to enroll and renew enrollment in the DACA program. In many cases, the loans have a 0% interest rate and terms ranging from several months to one year. As long as the loan is repaid by the end of the term, it won’t cost borrowers anything, although there is a relatively small application fee in some cases.
Some Dream Loan programs allow the funds to be used for any immigration or naturalization-related government fee.
How DACA recipients can build credit
It’s not just Dreamer Loans that DACA recipients are eligible for. They can also access:
Student Loans: While DACA students are generally not eligible for federal student loans, they can still qualify for some private loans, scholarships, and financial aid provided by their university.
Personal Loans: Traditional lenders like banks may be hesitant to provide personal loans to DACA recipients, but other providers like credit unions and other alternative lenders do offer them.
Mortgage Loans: Citizenship is not a requirement to buy a home or property in the U.S., but most people don’t have the funds to pay in cash and will need a mortgage loan. Like personal loans, credit unions and alternative lenders may offer these loans, including ITIN mortgages.
Not having citizenship is already working against DACA recipients when it comes to accessing these loans, so their credit history and score are even more critical than it is for citizens.
Upwardli can help DACA recipients, and other immigrants build credit in the U.S. Upwardli has partnered with credit card companies, personal lenders, and other financial service providers who understand both the importance of building credit in the U.S. and the unique needs of those newly arrived to the country. Upwardli has also created dozens of resources on many aspects of U.S. personal finance, including budgeting, credit scores, investing, and much more! If you are new to the U.S. or just trying to learn more about personal finance, Upwardli is here for you!
