Lenders learn early in their careers that taking a conservative, risk-averse lending position is the best strategy to maintaining a grade A rating and a healthy balance sheet. According to a recent research brief issued by TransUnion and the Filene Research Institute, credit unions are leaning too far on the conservative spectrum of lending, resulting in missed opportunities and undermining their long-standing reputation as the lenders who are best able to help the communities they serve.
The analysis reveals that many credit unions have extremely low delinquency and charge-off rates, signaling that their current lending approach no longer aligns with the true nature of a credit union – to be accessible to all people, regardless of credit profile. Through interviews, qualitative and quantitative data, many credit unions reported to TransUnion that they were losing valuable business for the sake of maintaining an unrealistic number for delinquencies and charge-offs.