If credit unions don't do it, who will?
That's the question being posed by Scott Earl who wants credit unions to rethink what can be done for members with impaired credit.
Earl, who had been heading up the Credit Union for Kids program for the Children's Miracle Network and who for the 12 years prior to that was president of the Utah League of Credit Unions, is now CEO of the REACH Association. REACH stands for Responsible Enterprises for the Advancement of Credit Health, and as Earl made clear in remarks during NASCUS' annual meeting, he believes the issue of responsibility goes both ways.
"There is a lot of discussion of the credit impaired, but I don't know how often they are thought of as underserved," Earl said.
Earl said he suspects most people view the credit impaired as deadbeats and spendthrifts. "But as I've dug into this further, this is not the full picture," said Earl, citing numerous statistics related to bankruptcy, such as the fact 87% of families with children that file for bankruptcy is due to divorce, medical reasons or job loss.
Earl noted that C and D loans are growing fastest among lenders. "I'm told that 40% of the people who walk into an auto dealership have less than stellar credit," said Earl. "We are quickly becoming a country of haves and have-nots. And in part it's occurring because of the way people handle credit. The majority did not set out to be a deadbeat. They got in over their heads and didn't know what they were doing."
Credit unions are people-helping-people organizations, Earl reminded, pointing out that the Federal Credit Union Act states that CUs are organized to "promote thrift" among members. Similar language that also appears in most state acts.
"I think it becomes credit unions' responsibility because it's part of our social mission to step up and find ways to help these people," he said. "I think credit unions are the best folks to take this on and do it seriously. If not credit unions, then who? I firmly believe credit unions ought to have formal counseling programs. There ought to be someone there on your staff to help people with credit problems."
Earl encouraged credit unions to do education, seminars, webinars, and training on the growing problem of people in debt.
Moreover, he said credit unions can do more with savings programs, stored value VISA cards, subprime auto loans, and more. "I'm not advocating you give these people your standard book of business," said Earl. "But there ought to be some programs for them, savings programs for starters."
