Why 1 CU Has Intro'd 'Managed Credit'
Community Resource Credit Union has established a new Managed Credit Program that assigns interest rates based on credit scores of its members.
For those who don't fare so well, financial officers are standing ready with advice on how to improve their scores and qualify for better rates as well, said Ronnie Anderson, senior VP-credit manager with Community Resource.
Anderson said financial officers use specific criterion to rate their members based on credit history, giving those with excellent credit the best rates available and giving loans at higher -but still competitive-interest rates to those who have challenged credit histories with the goal of improving their scores in the future.
"Most consumers are aware that the credit bureau assigns a base score to every credit bureau report,'' Anderson said. "However, the average person has no idea what goes into the make-up of that score and what causes it to go up or down.''
Anderson said it was too soon to comment on CRCU's program, implemented in June, but added that he had confidence in it considering its success at nearby Members Choice CU in Houston. MCCU is among many credit unions across the country that have implemented the Managed Credit Program to reward members with good credit and assist members who, because of past credit problems, have been denied loans or charged exorbitant rates at other financial institutions.
Here's how scores are calculated:
* Payment history, 35%. The impact of missing a payment weights heavily.
* Capacity, or how much credit the member has available, 30%.
* Established credit history, 15%.
* Accumulation of debt over the last 12 to 18 months, 10%. This takes into consideration how quickly the member has acquired new debt.
* Mix of credit, 10%. For example, installment vs. revolving, secured or fixed terms compared to credit cards or open lines of credit. (The more finance company loans the member has, the lower his score.)