'Put a Pulse' to Every Loan

June 20, 2010
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CU Mag: How do you accommodate members whose credit scores have fallen?

Vann: We’ve widened our buckets. We have five credit buckets: A+, A, B,C, and D. I established an A+ bucket and widened our A and B buckets so they recognize more people who are good risks but whose credit scores may have fallen—not necessarily because of anything they did.

We don’t have high average credit scores to begin with. My A+ bucket starts at 700, where at most institutions it starts at 740 or above. We don’t have many people with 740 Beacon scores around here. We know our audience.

That’s the other side. Most people in this business really don’t know their audience. And if you don’t know your audience, how will you price and lend to it? If you think everyone across the U.S. fits these buckets, then you really don’t know your audience.

When you have someone at the branch making loan decisions, you build real relationships with members. When you have someone making centralized decisions, they’re just repeating what’s on the screen in front of them. There’s no sincerity.

All they’re doing is selling someone else’s decision that they may or may not agree with. They’re just a puppet repeating what someone else is telling them to say. That doesn’t work for me.

CU Mag: Sounds like traditional underwriting

Vann: Yes. We have members who’ve been with us for 25 to 30 years. Their lives change. But as long as their relationship with you hasn’t changed—they’ve treated you well and always met their obligations—why should you treat them differently?

Relationship, stability, and ability are the three primary factors we look at. Then we throw credit on top of those. But we already know that credit will be a challenge here.

We use credit score to show us the current trend and to price the loan. We throw members in a rate bucket and give them discounts for their relationship with us. We reward behavior that we want and upcharge behavior we don’t like.


Navy Army Credit Union obtained a community charter in January 2003 and has since quadrupled in size—without accompanying delinquency issues. Vann expects the credit union’s assets to exceed $1 billion by the third quarter.

Check back to see how Navy Army Credit Union made the transition to a community charter.

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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