DES MOINES, Iowa-CUs are loosening credit standards to widen the pool and bring in more loans, reports The Members Group.
TMG VP of Sales Brian Scott said he sees this happening at CUs across many consumer lending products, including credit cards. "Lending is up at credit unions, and as we all know, finance charge income is a big revenue stream. Overall, I think more credit unions are not relying as heavily on credit score for the final decision."
Scott is seeing credit unions allowing members leeway even if their score falls below their set cutoff if, for example, the member has been with the CU a long time and all of the person's loans are in good standing. "Credit unions realize a lot of good borrowers may have had their credit scores rocked a bit in the last few years. Credit score no longer is the total driver of the lending decision."
CUs are also relying more on analytics to raise card usage, both for credit and debit, explained Scott. "They are looking more at member behavior, such as where they make their purchases, to laser-focus promotions. This is helping increase transaction totals, getting members to use their cards more for areas they typically spend in and to try to get them to widen their purchase scope, using cards for purposes they currently are not," he said. "With debit, credit unions are increasing the number of transactions to help offset swipe fees that are slowing falling as the result of the Durbin Amendment."
