Fast fact
Gen Y has the lowest amount of debt of any borrower demographic. It also has the lowest average credit score, 672, according to Experian. By contrast, Gen X has the highest amount of debt of any demographic and the second-lowest average credit score, 718.
Products such as Darden Employees Federal Credit Union’s ($28.8M, Orlando, FL) Credit Builder Car Loan offer the same opportunities for unproven new borrowers as for those with strong financial histories who were dinged by temporary setbacks.
“This product was developed specifically to help our members who either have no credit history, because they're young and this might be the first time that they're looking to get any form of credit, or they have had some rough patches in the past and need to rebuild their credit,” says Brooke Rodriguez, the credit union’s assistant vice president and marketing manager.
Regardless of credit score, if borrowers can satisfy alternative lending criteria — including one year of continuous employment and six months of membership or the ability to deposit one month’s payment upfront — the credit union will approve them for an auto loan of up to $12,000. The product’s interest rate starts at 17.95% but drops 1% with every six months of on-time payments.
DARDEN EMPLOYEES 12-MONTH AUTO LOAN GROWTH | DATA AS OF SEPTEMBER 30, 2012
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“When we launched this product, we first reached out to our vehicle applicants that had been declined in the recent past,” Rodriguez says. “We talked about this product and explained how it might be a good fit for their needs.”
Taking An Advisor Mindset
Many credit unions integrate mandatory financial literacy components into products and services designed for the credit damaged. However, it’s not only members with poor credit scores that can befit from such resources.
“In challenging financial times, it is more important than ever to have a true understanding of why credit scores matter and how significantly they can impact one’s day-to-day budget,” says Dennis Hebert, vice president of sales and business development for Granite State Credit Union ($308.9M, Manchester, NH).
To address this need, Granite State offers interactive sessions for all employees of its affiliate business partners throughout the state. The credit union expects attendance at these sessions to reach 400 individuals by the end of 2012. Such positioning of the credit union as an educational resource bodes well for attracting future business from potential membership pools.
GRANITE STATE 12-MONTH MEMBERSHIP GROWTH | DATA AS OF SEPTEMBER 30, 2012
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“The program has been so successful that we now offer free credit reports to all of our members, complete with a private one-on-one review,” Hebert says.
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