Friday, February 17, 2023

SECU Risk-based Lending # 6

To: SECU Board of Directors 


Dear Chairman Ayers,

Won't hold you long today, because I suspect you and the SECU Board are eager to get on into the weekend and watch the Super Bowl ! By the way, you and the Board aren't really going to run SECU commercial ads during the game, are you? Those ads cost millions don't they? Bet that was just someone doing a little pot stirring, wasn't it? But y'know, these days members are never quite sure what y'all are really doing - if you know what I mean.

RBL # 5 gave you a "Common Sense" plan for increasing the loan portfolio while offering all members the best borrowing rates around - without discriminating against any members based on their credit score. With $14 billion stacked up in investments yielding 1.13%, why wouldn't you offer lower loan rates to your members? Whose money do you think it is anyway?

Wanted to show you one more example of how all members are put at substantial financial risk when Chairman Ayers and the SECU Board sets loan rates based upon punitive, discriminatory, and often inaccurate credit scores, Risk-based lending does not decrease lending risk to SECU, but it does put every member at greater financial risk. And,  the SECU Board has told the SECU lending staff that they can not remove the extra, higher rate surcharges imposed by RBL even when the SECU staff knows those penalty rates are not justified by the true creditworthiness of the SECU borrower.

In other words, Mr. Ayers and the entire SECU Board have told the SECU staff that the Board no longer cares what the staff knows about the individual, local member.  The SECU Board - sitting a bit too smugly in Raleigh? - wants the staff to do what the Board has now done  - stop listening to the members!

Here's a real life example of how a credit score can inaccurately reflect the credit risk to SECU of a borrower and why charging those penalty, surcharge rates doesn't appear to be justified, regardless of what that credit score number is! Guess it would help to tell you that the examples shown below are from my actual, personal American Express card account (which I only opened this year after some shenanigans commenced at my previous card issuer). Would note that my AMEX profile says I have a 42-year credit history, no delinquency/past due, and have only two existing accounts - AMEX and that "previous issuer" card.

The AMEX card allows you to see (simulate) what happens to your credit score if something adverse happens. The current score of 741 is "A" paper at SECU. But in the first example if I let just one account go past due for 30 days, the score will drop to 603, which is "C" paper and I would pay an extra $1,000 on an $18,000 SECU 5-year used car loan. In the second example, if I let all of my accounts (both of them!) go 30 days past due the score drops to 561, which is "D" paper and I would pay an extra $1800 for that car loan!

                image.png            Now, I may currently pose a sanity risk to Chairman Ayers and the entire SECU Board, but I hope no one in their right mind believes I pose a credit risk to SECU. RBL unnecessarily and unjustly will penalize the majority of SECU borrowers!

SECU lending staff will tell you that they hear all kinds of stories about why members' payments are late - " it got lost in the mail, got washed in the washing machine, dog ate it, was on vacation, I forgot". But also, "I was in a serious car wreck, my partner filed for divorce and cleaned out the joint account, I've been at the hospital - we found out our child has lymphoma, I had to use the mortgage money last month to bury my mother."

Most of the stories are true. In life, some really bad stuff happens to some really good people - our co-workers, our neighbors, our friends, our families, and the members of SECU.

Chairman Ayers, how in God's sake did you and the SECU Board decide to stop listening to the hurts, and hopes, and heartaches...and humanity of the members of SECU? They deserve better!

Hope you enjoy the Super Bowl, be looking for the ad.

Simulation #1 - How your score drops if 1 account goes 30 days past due
Screenshot_2023-02-09 American Express® MyCredit Guide(2).png

Simulation #2 - How your score drops if all accounts go 30 days past due
Screenshot_2023-02-09 American Express® MyCredit Guide.png


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