SAN FRANCISCO-SF Fire CU here is using its online banking system to boost lending, pre-approving members for secured and unsecured loan amounts once per quarter.
SF Fire is pulling member credit scores on a quarterly basis and then running them against additional metrics, including delinquency history, length of membership and income (using Experian's Income Insights solution) before offering the preapprovals, according to Richard Smith, SVP of member experience at the $785-million, 38,700-member credit union.
When members enter the online banking system, they are alerted that they have been pre-approved for a total amount in Moneyline, which combines both secured and unsecured offers. More than $6 million has been lent as a result of Moneyline since the program was instituted six years ago.
"They have it available to them as long as they meet the criteria," said Smith. "It's updated every quarter, and if for some reason their credit drops, they may lose Moneyline next quarter."
Approximately 50% of SF Fire's membership currently qualifies for the program, and the CU has nine different tiers for Moneyline offerings, bottoming out at a $5,000 secured loan for a 630 credit score, up to a combined total of $125,000 (including $25,000 unsecured). Smith explained that members can use the funds for any loan product SF Fire offers. The loans are filed in Call Reports in the appropriate category (such as auto loans, home equity, etc.), as though the member had come to the CU specifically for that product.
SF Fire currently has more than $486 million loaned out.
Internally, SF Fire establishes the overall amount the member is eligible for and then scrubs that against any loans the member currently has with the credit union. "If you're initially approved for a $100,000 line of credit and you already have a $25,000 car loan, you get $75,000 in Moneyline," explained Smith.
As members use those available funds, their available balance is reduced within Moneyline.
The CU uses its existing pricing on all the loans and does not offer special pricing on any loans made via Moneyline. When members become eligible for Moneyline they are notified via the mail; if they become ineligible they are not notified, but they are sent a "welcome back" letter if they become eligible again.
Recession's Impact Still Unsure
The program began before the recession, and Smith was unsure of how effective it was as a lending tool during that downturn. The credit union, however, did reduce its maximum unsecured loan amount to $25,000 from $50,000 as a result of the recession, but overall has not analyzed how the recession affected the program. "We had such a downturn on the consumer loan side during the recession and such a drop off, so every little bit helps," said Smith. "I'm sure it helped having it out there and available, I'm just not sure it was a motivator (for lending), because nobody was buying a car back then."
Smith noted that until October 2011 SF Fire averaged about 300 new members per month; since then it has averaged 700 new members per month or more.
"We did see some score migration downward (during the recession), so the amount of dollars available on Moneyline for individual member groups was reduced, but we've also had a surge in memberships, so overall the amount that was available continued to be large for our credit union, just because we had a lot more members walking in the door."