LAS VEGAS -
That's according to Linda Moynihan Vance, vice president-credit unions, with Milwaukee-based TransUnion. In fact, she said, credit unions are seeking far more information on assessing risk within every aspect of their portfolios.
"We're helping credit unions with risk analysis, tracking and identifying risk," Vance said. "More customers are coming to us to help assess risk in portfolios."
In terms of risk-based pricing, Vance said some CUs are just moving away from the one-rate-fits-all model and are seeking guidance. Other CUs, veterans of risk-based pricing, have been seeking assistance in recalibrating their pricing as the economy changes.
"We hear from credit unions that say the economy has slowed down and rates are not what we had hoped; we're having a slow lending year," she told the Credit Union Journal during CUNA's America's Credit Union Conference. "We get involved in all aspects of their process."
The critical issues in risk-based pricing, she noted, are the setting of rates at different tiers and identifying how many tiers will be in place. Most credit unions, she said, have from three to six tiers.
"Growth has not been what many credit unions had pegged for 07," Vance said. "Risk-based pricing helps ensure that high score members are rewarded and that lower-score people are paying for the risk they are bringing to the portfolio.
TransUnion is best known as one of the big three credit bureaus and Vance said consumer awareness of and access to their credit reports has changed the game a bit.
"There is a lot of awareness among consumers of credit scores now, thanks to the FACT Act," Vance said. "It has helped to educate the consumer and the consumer has really taken to it. Credit unions have been there with them. We do training with our partners on credit scores. Consumers are more in tune with their report and how to monitor their reports. But what I'm not sure people understand is the range around their score. It's important to understand it's not just the credit score; there are loan-to-value and debt-to income ratios-all are pieces."
She stressed that consumers must understand that a credit report is not the sole determinant of whether a loan is made, something especially true at credit unions.
"There is always a story with every credit union member, and that is what credit unions have always done well," she observed. "The credit score is just one piece of the puzzle."
