Cornerstone Community Credit Union in Des Moines, Iowa, has partnered with the online marketplace lender LendingPoint to provide loan products for its members that struggle to qualify for traditional financing.
The partnership will help the $22 million-asset Cornerstone expand loan options for members who have trouble getting loans because of low credit scores or adverse credit histories. Financial terms of the agreement were not disclosed.
LendingPoint, in Kennesaw, Ga., will originate the loans and provide the financing, said CEO Tom Burnside. LendingPoint will also hold the loans and assume all risk.
This is the first arrangement of its type for LendingPoint, Burnside said. The company plans on seeking more similar relationships with credit unions.
One benefit for credit union members is that Cornerstone has already vetted LendingPoint as a legitimate institution, and members won't have to do that work themselves, Cornerstone Chief Executive Gary Key said in an interview.
"We'll bring that member back in for another loan at a later date, once they've kind of proven themselves … that they can make the payments sufficiently," Key said.
The loans will be available to both existing Cornerstone members or new members, who will be required to open a checking account with Cornerstone.
LendingPoint uses its own scoring models to make underwriting decisions, and its criteria includes data beyond the traditional debt-to-income ratio, Burnside said.
"We're looking for reasons to say yes," Burnside said. "We take 100 different data sets and move it down into to 12 credit categories, and from there we do a rank order of decision of their credit."
The partnership was announced last week at the Credit Union National Association's Governmental Affairs Conference.