How An Examination Of Loan Denial Rates Changed One CU

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Heritage Credit Union knew something was wrong with its 50% loan denial rate.

But what it didn't know was that the journey it took to change that-which has since boosted the approval rate to 70%-would make such a big difference to the entire credit union, not just the loan-to-share ratio.

"We looked at the way we were doing loans and realized we were denying quite a few loans, and we knew something was wrong with that," said Heritage CU's Cindy Sutherland. "We asked ourselves: what are credit unions for if not for making loans? We knew we needed to get back to our roots."

With the help of Rex Johnson's University of Lending, Heritage completely revamped its lending program and created a program it calls "creditwise."

"We've changed the way we make loans," said Heritage CEO Bob Lestina. "By implementing creditwise, we give our members the power to help themselves out of debt by building a strong credit history."

Members who take advantage of the creditwise program receive a copy of their credit report, which is then evaluated by an experienced loan officer. "Then we're able to look at that and go over it with them and say, 'Here are three things you're doing great, and here are three things you can improve on," Sutherland offered. "Even if we're not able to make them a loan-or if they're just not looking for a loan right now-we've helped them, and we've deepened that relationship."

The creditwise program focuses on educating the member as much as making a loan to the member-but getting to that point also meant some reeducation of the credit union staff. "We had to learn to look for ways to make the loan, not just look at the credit score and deny the loan because the person has bad credit," Sutherland related.

Among the strategies for making loans that Heritage might otherwise not have considered has been to look for ways to tie the loan to some sort of collateral-not only does it make the member less likely to blow off the loan, but it gives the credit union something it can collect.

HCU sent out a direct mail piece to members who had been denied in the past or who had a low credit score promoting the credit wise program-but only after some real-world testing of the program itself.

"We started implementing the new lending policies toward the end of the summer, but we didn't really kick it off until January to ensure we had all our staff trained, that we had all our ducks in a row. We were tracking delinquencies, as well, to make sure it was working right," she commented. "Then we sent out the direct marketing piece."

The credit union sent out 687 mailers and in less than two months' time 58 members had come in to do credit work sheets and go over their credit scores with a Heritage loan officer, and 24 loans were made as a result of those worksheets.

Creditwise is one of many ways that HCU carries out its mission of helping members achieve their financial goals throughout their lives and to reach out to the underserved community and help the underserved establish a credit score that will allow them to reap the benefits of good credit.

"People are very grateful when they find out that we're able to help them," said HCU Branch Manager Travis Thompson, "It gives them a sense of hope knowing that they can get their finances back on track for the future."

And in the midst of helping all these people, something special has happened at the credit union, too.

"We implemented a corporate e-mail that I call the Credit Union Difference," Sutherland related. "We have seven branches in two states, so many of our branches simply don't know each other. I asked the loan officers at each of the branches to e-mail me a story about a memorable loan they made. For example, there was an Amish couple that couldn't' get a mortgage because they had no credit score. We looked beyond the lack of a score and made that loan. Or there's the mother whose son is in the military, and she wanted to go visit her son but she didn't have the money to make the trip, so we loaned her the money to go see her son. We've had two of our employees receive flowers from members who were so grateful for what the credit union did for them. These are fantastic stories."

And they're stories that should be shared. So Sutherland regularly e-mails these special loan stories to the entire Heritage staff to remind them what the credit union is all about.

"These stories make you feel good about working at the credit union," she said. "It makes all of us realize what important, powerful work we do. Even if we're not a loan officer, what we do supports those efforts. This is what the credit union is about."

CUJ Resources

For more info on Heritage Credit Union, call 608-241-2191 or log on to their web site at

For more information on credit reports visit the three credit bureau agencies web sites at,, or

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