By Ray Birch
LA CROSSE, Wis.–Some good news is coming out of the pandemic, according to Marine Credit Union—many of its members’ credit is in better shape now than it was a year ago, and nearly 3,000 members have signed on with a new credit-building program.
"The majority of our members’ credit scores are improving,” said Adam Keer, chief experience officer. “More than 36,000 of our members’ scores have improved in the last quarter. For more than 30,000 of our members, their daily average deposit balance has increased over the past quarter.”
Keer said $964-million Marine CU has been closely monitoring its members’ credit status.
“The government stimulus, of course, has helped. And people are just being more careful about what they're spending,” explained Keer. “That is resulting in better spending and savings habits for people. More members are paying on time.”
Marine CU’s perspective is being offered a part of a CUToday.info series looking more deeply into the health crisis’s impact on members’ credit. The series has illustrated the uneven effects of the the pandemic with consumers, with some improving their FICO and others are losing ground.
A recent report from TransUnion, for example, found serious delinquency rates at the close of 2020 were down 89 basis points from the 10-year peak of 2.18%, observed in Q4 2019.
It isn’t just some consumers’ balance sheets that have improved. Keer explained the credit union, too, is in better shape, with its loan loss allowances well exceeding incurred losses.
“Back in March and April when the pandemic first hit, we were expecting serious charge-offs to occur,” he explained. “We set aside significant provisions for loan losses, which have just not happened. Our delinquencies have actually lowered. To this point, the pandemic has been good for the majority of our members’ credit. We hope these habits will stick.”
One Key Difference
Keer pointed out what is happening with Marine CU members’ credit now is different than what happened during the Great Recession, recalling that 10 to 12 years ago, members’ savings balances did not increase during the recession. Moreover, their attitudes were not the same as they are today.
“During the Great Recession we did not see people tighten their belts like they have now and change their behaviors too much,” he said.
The difference, emphasized Keer, is members today see the pandemic as a more widespread problem and one that brings with it much more uncertainty than the previous economic downturn.
“Even people who might not be directly impacted by a job loss, they're tightening their belts saying they have uncertainty, and the appropriate thing to do is to prepare for uncertainty. That is a big difference from what we saw at Marine in 2008 and 2009,” he said. “This is more of an everyone problem, not just a big problem for the Sand States, for example, a common perception during the housing crisis.”
Despite the good fortune for most of its account-holders, Marine CU is offering two products to help members who need assistance get their credit back on track.
“Finding Home, our high-intensity program for a small number of people, helps those who were not eligible for home ownership rebuild their credit and finally be able to purchase a home,” he said.
‘Get Credit Program’
But Marine CU’s big focus today is on its “Get Credit Program,” which has reached more than 2,700 members since it was introduced less than two years ago.
Get Credit, Keer explained, “provides a safe and simple way for members to build credit and save money without the hassle of a down payment, unnecessary fees or additional debt.”
With Get Credit, members can select any amount of money they’d like to have saved by the end of the program. If members make on-time payments toward that amount each month, after 12 months they can unlock their cash—and have an improved credit score. There is no application fee.
“Marine Credit Union for years has been focused on serving the underserved—people who can't just walk across the street and get approved for credit,” said Keer. “That is our mission. That is our purpose.”
Adam Keer
Keer explained a typical share-secured loan takes 40 minutes to open and can be a drain on the credit union’s resources.
Fully Automated
“So, we came up with this idea for this fully automated, digital Get Credit program that allows people to basically self-serve and to move into a discipline budgeted savings program and build their credit,” he said about the online loan. “It just made things so much easier and streamlined. It has allowed us to be able to afford to help more people.”
Marine said one important lesson the credit union has learned from its Get Credit product is members do best with the program when they’re encouraged by the credit union.
“We found the more times we contact them to let them know they are doing well, that there is hope to improve their financial lives, the better they do,” said Keer, who added Marine has introduced more automated contacts from the CU now to touch these members’ lives more often.