Thursday, June 6, 2024

The New SECU 3-Tier, Risk-Based Lending: Smaller Bite... ... but still looks like a croc.

✅ Under the new 3-tier RBL system adopted by the SECU Board, member borrowers with "no credit" are assigned automatically to the worst (highest!) interest rate tier (the"C-tier)". 

😎  What does "no credit" - or often referred to as a "thin credit file" - mean?

From Experian (a credit bureau): "How a Thin File Affects You."

  1. A thin credit file can make it more difficult to access new credit when you need it.
  2.  A thin credit file typically refers to a credit history with fewer than five credit accounts on a credit report.
  3.  Approximately 62 million Americans have a thin file, according to the Experian report.
  4.  Even if you are approved, a thin file can keep you from getting the best rates and terms available.

😎 Of the 62 million Americans who have no credit or a thin file, what age group would you guess is affected the most? Yes, that was an easy question wasn't it! Young people just starting out in life! Do you know why so many young North Carolinians don't have a credit score? Because a loan contract is not enforceable in North Carolina unless the borrower is at least 18 years old.

😎 The SECU Board's 3-tier risk-based lending  assumes that young SECU members with no score/thin files are high risk borrowers - just because they are young - and automatically sticks these young people with the highest, worst borrowing rates!

😎 The better alternative would be to assume that our young North Carolinians were bright, responsible, wonderful folks and give them the very best A-rate available! But the SECU Board has its own - obviously unfounded by any facts - opinion about North Carolina's young people: They're really risky! They're guilty until they prove they're innocent.

✅ Who are these SECU young folks that the SECU Board so cynically discriminates against, solely because they are not old enough to have a "fat file" credit score? ... new North Carolina teachers,  ... new State troopers,  ... new nursing assistants/LPNs, ... new graduates from Pembroke University,  ... new crew members at DOT,

      ... new correction officers, many of the new CC tech/certificate graduates,

  ... and many other young people in your neighborhood... including your family, your children and your grandchildren.

Do you support this lending bias by the SECU Board? Is this the credit union you want?  Or is it a croc?