Working With Members And Taking On A Little More Risk
LANSING, Mich.-At a time when most financial institutions are tightening credit standards, Sally Boyer is taking more chances on members who stop by her Michigan State University FCU branch for a loan.
Boyer, who manages the South Lansing location of MSUFCU, said her CU's direction is to accept a little more loan risk during the financial crisis to get members back on their feet. "We know that times have been tough and that things may even get a little worse before they get better. But we want to see if we can stretch a little bit."
Members never get more debt than they can handle, Boyer reminded. "We don't want to put them deeper in debt if that is not going to eventually put them in a better position. We may try to stretch loans longer if we know the member will be in a stronger position at a later date."
Many of the loan decisions Boyer ultimately ends up making are based much more on the member than on collateral. "If the member needs a loan for a car because the old one just won't make it anymore, we will likely weight the decision more toward what we know about the member, and their willingness to repay."
After taking a good look at credit score and credit history, even if a member's credit rating has been negatively affected by a recent event, if the member provides a good reason for the lower score, Boyer and the loan team overlook the issue.
Staff is more likely, too, to be more lenient with longstanding members than those who just joined. "It's about building relationships at a time when members need the assistance," said Boyer.
But the credit union can't always make the loan. "It's been difficult, simply because of the times," Boyer said. "While we are trying to be more lenient, we have so many members coming in facing financial hardships.
"Sometimes we cannot fill their needs. In those cases we see if there are other products we can offer, maybe a Visa rather than a signature loan. Maybe there are other products that might fill the same need but not put them at such risk. The answer could be credit counseling."
During the economic crisis Boyer said it's most important to "honor the member. You have to listen to their stories, try to put yourself in their place, understand where they are in life, and believe what they are telling you is the actual situation."
MSUFCU is based in East Lansing, Mich.