It’s the time of year when credit unions see an increase in consumer lending. Members seek to secure home loans or financing for an automobile. That means two things are necessary. First, you are going to need compliant consumer lending and/or home equity lending forms. Oak Tree has forms to cover all lending and disclosure requirements to fund either loan type. Our home equity and consumer lending packages are customizable, and contain all of the disclosure forms necessary to make the process as simple as possible.
Secondly is a discussion about credit scores. They are perhaps the primary determining factor, and a proper understanding now can help your members secure the best financial opportunities later. Credit scores influence interest rates, loan amounts, collateral requirements and, ultimately whether or not to lend money to a borrower. Here is how they are determined:
Payment History. This accounts for 35% of a consumer`s overall credit score. This includes any sort of public information like bankruptcies and judgments. It also includes things like overdue payments, how much is overdue, and the amount of time between these adverse instances.
Types of Credit. This is actually referring to the types of credit already used by a member, and generates 10% of a member`s overall credit score. It`s comprehensive too, including things like a consumer’s mortgage, retail accounts, credit cards, and installment loans.
Amount Owed. This comprises 30% of an individual`s credit score. Things included here are items such as total number of accounts (and their balances), how much of any credit line is used at any given time, and the ratio of installment amounts owed against the amount already paid.
Credit History Length. 15% of a consumer credit score comes from one simple factor: the amount of time an account has been active. Consumers with new accounts indicate more risk since they are considered new to the world of lending.
New Credit. This makes up 10% of an individual`s total score and accounts for how many credit accounts have been recently opened, and the total proportion of those accounts levied against things like recent inquiries, and any positive reestablishment of credit history if payment was a problem in the past.
This will allow them to make adjustments before they seek funding, and hopefully, improve their credit score. When the time comes for your members to start the process, you will be ready if you are an Oak Tree customer. They will too, since you gave them all the information they needed to properly understand their credit score. If you need consumer lending, or home equity lending forms, contact us today. All of our forms are customized to your needs, and can integrate with any data processor. We have you covered, so you can work with your members to improve their credit score so they get the best rates and terms available when it is time for them to borrow!