CU Magazine Best Practices Report: Risk-Based Lending -- More Members, More Loans

In this report, eight credit unions share their real-life experiences with risk-based lending programs. Discover how risk-based lending can help you meet growth goals and provide vital lending services to your most “in need” members. The report uses case studies to examine how credit unions of varying membership and asset sizes are operating successful risk-based lending programs. The credit unions have identified several factors necessary for success, including:

• Developing underwriting criteria that enable them to make as many loans as possible without excessive risk
• Educating lending staff on risk-based lending concepts and interpreting credit scores to make sound loan decisions
• Monitoring program results, including loan yields, delinquency ratios, and loss rates
• Adjusting rate tiers and underwriting criteria to mitigate risk

These risk-based programs have allowed the credit unions to serve more members—often those of modest means—who would not have qualified for loans under a one-price-fits-all program. The report examines how credit unions have been able to save members from paying the outrageous rates charged by payday lenders, finance companies, and rent-to-own stores.

This Best Practice Report is 28 pages.

Also available :

• as an Adobe PDF