Lending

'Put a Pulse' to Every Loan

June 20, 2010
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CU Magazine: How do you lend to members with less-than-stellar credit without assuming too much risk?

Vann: We leave loan decisions in the branches.We put a pulse to every loan. Our systems can support some auto decisioning and we have some filters to help the lender. But we don’t take the pulse out of the loan. 

When you’re dealing with people that have lower credit scores, you have to build relationships. You have to understand why their scores are what they are.

Many lenders have consolidated or centralized their loan approval process. They’re looking for consistency and risk avoidance. But I think the industry relies too much on credit scores and auto decisioning [when making loan decisions].

Many peoples’ credit scores are dropping not because of their behavior but because credit card companies are reducing their credit lines. That drives consumers’ credit scores down—and they didn’t do anything.

That has happened across the board as the credit card companies reel in their risk. The people they’re reeling in the risk on are probably those who need the line most.

As their credit scores decline, these people start falling out of credit “buckets” [tiers]. And who’s catching them?

We look at the member’s credit score but it’s not the determining factor. We look at members’ real ability [to repay] and their relationship with us. Then we look at credit score, then collateral. That’s how we build every application.

We have more than 40 lenders in our branches who make loan decisions within certain guidelines. Every branch has an anchor lender that will cover almost every loan request that hits the desk that particular day.

Our loan-to-share ratio is over 90% and 50% of our offerings are C and D credit. That’s where we make our money.

Next: Widening credit 'buckets'

Put a Pulse to every loan

Peggy Brown
July 09, 2010 9:13 am
Would like to know if Vann would share his lending guidelines for consumer lending. I am looking at revising our lending guidelines and his situation is the same situation I am facing in East Tenn. Please help... Thanks


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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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