General Policy Statement:
The Credit Union has established a risk-based lending and risk-based pricing program, which includes a credit scoring and pricing model, which will reward the members based on the degree of individual credit risks. The Credit Union also desires to reward its most credit worthy members with a preferred loan commitment utilizing a tiered interest rate structure while attempting to assist those members who may have weaker credit. Both the credit scoring and pricing models will be used in determining the loan decision and the initial rate to the borrower(s). Risk-based lending and risk-based pricing models may be offered on all lending products. The risk-based lending and risk-based pricing program will be monitored at least annually and/or discontinued at any time.
RISK-BASED LENDING - The Credit Union will utilize a lending methodology to determine the amount of an individual may qualify for either unsecured or secured lending products based on credit score, gross income, and debt obligations along with loan to value of collateralized asset. The lending methodology will be determined by the CEO and reviewed annually by the Board of Directors.
RISK-BASED PRICING - The Credit Union will utilize a pricing methodology to determine the interest rate applied to a specific loan. Interest rates will include a “base” rate plus any applicable “risk premium” interest rate based on the type of loan product, age of collateralized asset (such as model year), liquidity level of the collateralized asset, term of loan product, credit score, debit to income ratio, percentage of collateralized asset being financed, and repayment methodology. Additionally, a discount interest rate may be applied based on repayment methodology and various promotions or incentives that may be offered from time to time. The pricing methodology will be determined by the CEO and reviewed annually by the Board of Directors.
Guidelines:
CREDIT SCORING - The Credit Union will utilize one of the major credit bureaus to obtain a member's
FICO credit score, as determined by the independent company Fair-Isaac Corporation.
(i)In the event that there are two or more borrowers, the credit score implemented will be based on an average of all borrowers' scores.
(ii)In the event there is no credit report or score, the Credit Union will assign the rates and limits set by the lowest score available to determine eligibility. This includes first time borrower's with no previous credit history.
(iii)The lowest acceptable credit score is 550. Therefore, those with scores below 550 will automatically be denied.
The credit score obtained by the credit bureau will be utilized to determined eligibility of maximum amount of unsecured debt a member may obtain from the Credit Union. That is, the higher the credit score, the higher amount of unsecured debt a member may obtain. Conversely, the lower the credit score, the lower amount of unsecured debt a member may obtain. This includes closed end (term) loan products and open end (revolving) loan products. This will only be applied to the current member loan application and not be subject to an existing loan product unless all member loans are being evaluated simultaneously, such as a review of open end revolving credit limits.

INCOME
A member’s income will be determined by verification of income sources, such as paystubs or payroll statements. Income verification for retirement income or government payments (such as social security) may be determined by verification of deposits. Additional consideration may be granted for the treatment of commissions, bonuses, overtime, shift differentials and the like by utilizing year to date information on an annualized basis.
A member may not need to provide information about alimony, child support, separate maintenance or other sources of income if the member does not wish to have to them considered as income. However, if a member chooses to list these sources of income then verification of will be required.
Self employment or rental income may be considered with additional verification required. The most recent year end tax return will be utilized and the taxable income portion related to such activities will be utilized. Additionally, year to date financial statements will also be required.
DEBTS
A member’s debts will be utilized from information gained from the member’s loan application and credit bureau report. All debts will be considered fully even if the member is jointly responsible or is a guarantor to another party. Debts listed on the credit report but are dated (last update) over two years from date of application will be considered as “stale dated” and not included. Past due amounts will be considered and included in within monthly amount on the basis of one-twelfth (1/12) the amount due.
DEBT TO INCOME RATIO
The total debts of the member divided by total income will arrive at a debt to income ratio. The maximum amount permissible for loan approval is 50%. That is, a debt to income ratio of greater than
50% will automatically be denied.
UNSECURED DEBT DETERMINATION
The maximum amount a member may obtain is up to 25% of income. This maximum amount is also subject to the limits within the specific Regular Unsecured Loan policy in chapter 13 of this section. This level may be reduced under the risk based lending methodology described above.
OPEN END REVOLVING (CREDIT CARD) LOAN DETERMINATION
The maximum amount a member may obtain is up to 15% of income. This maximum amount is also subject to the limits within the specific Open End Revolving (Credit Card) loan policy in chapter 15 of this section. This level may be reduced under the risk based lending methodology described above.