CHARLOTTE, N.C. — Dipping down into lower credit scores can help kickstart loan growth, but if it isn't done correctly, it's a solution that comes with significant risk. That's why Carolina Postal CU turned to Credit Score Analysis (CSA).
The goal: help members with B, C and D credit lower their bills and improve their credit scores.
And it worked. The CSA program helped boost Carolina Postal's lending numbers by 33% in 2013.
In 2012, the $86 million credit union was faced with declining loan activity and looking for ways to focus its lenders on making secured loans to members with less-than-perfect credit without increasing delinquencies. Celeste Cook, cuStrategies' president/CEO, created and mentored the CSA program along with Carolina Postal's marketing department.
"Celeste's training was invaluable," said Carolina Postal President/CEO Joy Watts. "If not for her CSA Program, lending strategies, and training of our staff, we would not have gone into this area as aggressively as we could. We certainly would not have helped as many members as we have. All of which, coincidentally, helped our bottom line. It's a win-win-win for everyone."
Carolina Postal's loans in 2012 totaled slightly more than $10 million. Following cuStrategies' CSA training in 2013 loans exceeded $15 million — a 33% increase over 2012. In fact, the two months immediately following the two-day CSA training, Carolina Postal experienced a 53% increase in loan dollars (January and February 2013). Loans for 2014 are more than $8.9 million, as numbers proceed to increase because of the CU's continued CSA marketing efforts.
Along with the loan growth, CPCU minimized its delinquency ratio for consumer loans — decreasing to .67% in 2013 from 1.98% in 2012. Its current ratio is .36%. The total marketing cost for the program was $14,458, showing a net profit of $46,662 and an ROI of 323%.
"Honestly it's a culture change — not a gimmick — not a 90-day marketing campaign," said Deb McLean, VP-marketing & business development. "Loan officers have to understand how to look at the total credit history that the member has. Your loan officers also have to understand that you are taking whatever the equity the member has and using it to refinance high, unsecured debt such as credit cards. They have to show the member how each step they take will put them one step closer to paying off debt and increasing their credit score, both of which will ultimately save the member money over their lifetime."
