Callahan Clients, please log in for direct access to:
Learn What You're Missing
Upgrade Your Subscription
Thank you for your interest in reading the fantastic content we have on CreditUnions.com! However, the page you are trying to access is for subscribers-only. To learn more, select an option below.
All users must now log in to read, research, browse, and have fun on CreditUnions.com. Yes, we still offer freebies. And, yes, it’s worth the extra effort.
Print or PDF this article today because you won't have access to it later. Or, click here to learn how to get 24/7 access.
This article appeared in the April 2001 issue of the Callahan Report.
The statement above sounds great and has been the battle cry of the credit union movement since it was founded. We should care, we should be different-after all we’re not-for-profit. We should be willing to take risk and be flexible in our underwriting guidelines. We must believe that our members deserve a second chance.
Now I’ll challenge you to adhere to the above, because I believe that unfortunately, we’ve strayed from what our founders intended. Perhaps we’ve become more regulator-focused than member-focused. Today’s case study is a good example.
Bankruptcy is something we’re all too familiar with. Today’s case study demonstrates how someone who makes a mistake deserves an opportunity to start over. Let’s get a picture. The member is:
She was turned down because of a debt and bankruptcy six and a half years ago. She has established no credit since. We don’t know the size of the down payment, but there must be some judging from the amount we’re financing. The member, once notified of the turndown, had her son apply as a co-signer. Here was his picture:
What we have here is a classic example of a credit union member who made a mistake, acknowledges such and appears to have learned from it. She also recognizes that it’s not going to be easy to rebuild her credit-note that in the last seven years she’s taken on little debt. She has a five-year stable job and is also working part-time. In addition, she appears to have saved some down payment for the car. The real key is that she understands the credit union’s concerns that she may not be credit-worthy, and, as a result, she’s having her son, who has an outstanding credit history, co-sign the note.
Unfortunately, instead of taking the “We’re different, We care” attitude, the credit union took the safe way out and rejected the loan because of her bankruptcy seven years ago. How do you think this made her son feel, remembering he’s a credit union member who has done substantial business with the credit union?
The loan rejection record at this credit union suggested to me that it is turning down hundreds more than it should. And this is not unusual for credit unions. I believe that members are sending us a message when one out of three Americans belong to a credit union, but only one out of eight of those members borrow at their credit unions.
CUNA recently completed a study of how credit union members perceived borrowing from their credit union. Although the scores in every area were favorable, the area in which credit unions scored lowest was “STRICTNESS.”
I believe we have a serious problem. What made us different was the willingness to listen and to take some risk, and that has been slipping away from us. My guess is our members are sending us a message. Let’s show them we really do care, and we really are different.
June 18, 2001
No comments have been posted yet. Be the first one.
Submit your email address to receive daily industry updates and web-only features.
P: (800) 446-7453 | F: (800) 878-4712
1001 Connecticut Ave. NW Suite 1001
Washington, DC 20036