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Rationale: The Credit Union encourages members utilization of our services
and maintenance of good credit ratings. This policy is established to reward use of credit
union offerings and sound budget practices.
The following credit union services will qualify loan applications with .25% discounts for
the use of each service:
1. Checking
2. Automatic payment from checking or payroll deposit
3. Credit Union Visa Card
4. Credit Union Debit Card
Heartland Community Credit Union utilizes a risk-based, credit scoring policy in determining
the credit worthiness of an applicant. Except for Home Equity Loans, Visa Applications,
and Share Secured Loan applications, all new loan applications, all additional add-on advances
to an existing signature loan, and all secured loan applications will be reviewed utilizing
the following process. This process, credit scoring, assures that applicants will receive
the best possible rate for their loan based on creditworthiness, and ensures that all loan applications
are graded consistently based upon credit union policy and rules and regulations.
A new credit report will be obtained which will display the Empirica and Horizon scores as
provided by the Trans Union credit reporting agency. The Empirica score was developed in
accordance with the Fair Isaac Group and predicts the possibility of delinquency for the next
twenty-four (24) months. Furthermore, the Horizon score is a bankruptcy model and predicts
the possibility of bankruptcy for the next eighteen (18) months. The two scores will be
applied to a matrix that the credit union utilizes.
The ranges for both scores will be at 575 and lower, and 701 or greater. Any Empirica score
that is below 575 would grade this applicant as unacceptable, or a very high risk, and
therefore, constitute an automatic denial by the loan officer. In addition, any credit
report that indicates insufficient data to credit scores is automatically declined. The loan
officer can submit to the Manager rejections with an override request or the loan officer
may request that the loan be presented to the Board of Directors for a decision. Should
the range of a credit report be abover 575, the matching scores of the Empirica and Horizon
scores on this matrix will determine the interest rate. The Empirica score is the primary
model and this matrix is outlined below. The matrix will accommodate all loan applications.
1. Home Equity and Visa loans shall not apply to the Incentive Based Lending.
2. A member and spouse shall use the higher of their respective scores on the matrix.
3. If a cosigner agrees to guarantee the loan, the credit report scores will be those
of the original borrower.
4. Contacting creditors, which can be very time consuming, may raise scores. Consumer
Credit Counseling of Kansas City is recommended for assistance in increasing a credit report score.
5. The member may have their incentive reassessed up to 90 days after the loan is granted.
There will be a $10.00 fee for the additional credit report. Otherwise, the member is encouraged
to improve their scores for future loan processing.
FICO Risk Score Classic
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<575
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576-600
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601-650
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651-700
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>700
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>701
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+1%
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0%
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-.5%
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-1%
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-1.5%
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651-700
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+2%
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+1%
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0%
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-.5%
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-1%
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601-650
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+4%
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+2%
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+1%
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0%
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-.5%
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576-600
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+6%
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+4%
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+2%
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+1%
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0%
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<575
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+8%
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+6%
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+4%
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+2%
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+1%
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