Dr. Randy Thompson Presents Using Analytics to Improve Business and Expanding Loan Portfolios with a Credit Builder Program

ATLANTIC CITY, N.J. – In two sessions Tuesday, Dr. Randy C. Thompson, Ph.D. shared how to incorporate financial counseling, pricing and underwriting in a credit builder program and examining the vital signs of your credit union. This way you can help members, and the credit union.

Randy Thompson

In his first session on vital signs, Thompson pointed out that Sometimes management can overlook an area that they believe might be within healthy ranges and ignore certain tell-tale signs that could exert an unhealthy effect on the CU system. Over time, this disconnect can lead to critical health problems for a CU. To mitigate this risk, he suggests CU managers employ a vital signs report, or CU Vital Signs/Key Financial Indicator (KFI) Report which identifies a set of 4 core indicators including: Equity Ratio, Loan to Share, ROA, and Deposit Mix.

In his second session on credit builder programs, he pointed out that the key to success is telling a good story. What is your credit union’s story? How do you stay relevant to our members? Members can put your credit union at risk but how do you identify who is putting you at risk?

Credit builder programs help us help our members (which is a GREAT story), but we also have to protect ourselves.

Making credit decisions based on where members were a year ago or even a few months ago in credit score is dangerous. Your credit union needs to get the whole story and sometimes take a risk. The single biggest predictor of potential loss or no potential loss is a changing FICO score, he pointed out.

Credit Builder programs could include a financial education class as a requirement for approval – this helps the member and also mitigates loss for the credit union.

Additional photos from NJCUL's 84th Annual Meeting and Convention can be found on the League's official Facebook page.