Lending is an area where the credit union mission is relatively simple: provide affordable capital to people and businesses to help them realize their dreams. This might mean a home, college education, or the ability to hire a new employee.

Our commitment to Financial Well-being for All™ means credit unions must find better ways to get capital to our members. The ability to safely access credit is a one of four key components of financial health, according to the Financial Health Network. Consumers using higher-cost credit sources will likely experience lower financial well-being.

The data shows credit unions step up when things look bad while banks pull back during crises. We lend more when people are in need because that’s why we’re here. Credit union lending increased 4.7% during the first year of the pandemic while bank loans fell 1.3%. Credit union loan growth has been 4.6% on average during the previous three U.S. recessions.

Credit unions work with members on personalized solutions to keep their money available while they’re dealing with a crisis. But financial well-being for all means creating the avenues to reach new communities.

The old way of doing business has left too many people behind. There are too many financial deserts and underserved areas when the economy is booming, not to mention during a recession.

Data is a key component to finding and serving those who don’t receive the financial services they need, and it’s key to creating something new and different.

Look at $8.7 billion asset Patelco Credit Union in Dublin, Calif., which had to decline 11,825 loans in 2020 for members who didn’t qualify. Patelco decided that wouldn’t cut it, especially during a pandemic.

So they looked at data on members and loans they had to reject and created the ScoreUp Credit Builder Loan.

Not only has ScoreUp provided loans to more than 1,200 members, 38% of those loans are going to new members and 72% are going to members under age 45. Patelco now partners with 21 local United Way centers to promote the loan.

Carolina Foothills Federal Credit Union in Spartanburg, S.C., launched a similar product for mortgages. The Financial Inclusion Mortgage for First Time Homebuyers has a 97% loan-to-value maximum, low closing costs, and no private mortgage insurance requirement.

The $162 million asset credit union partnered with local nonprofits to help borrowers obtain down-payment assistance, and it uses relaxed underwriting standards to make the loan more accessible. The average loan amount is $160,593, with one-third of borrowers receiving an average of $5,819 in down-payment assistance grants. Seventy-four percent of these loans go to low-income borrowers.

These products are great examples of credit unions taking direct aim at unmet needs in their communities, leveraging their experience, and partnering with other organizations to expand their reach. They began as an idea, and through collaboration and execution became something real that improved members’ financial health.

Until this point, these members had a difficult path to improve their financial health. But their credit unions came up with solutions to improve their financial well-being by looking beyond the way it’s always been done before.

Credit builder loans or mortgages averaging $160,000 might not make a big splash on an end-of-year balance sheet. But they’re building up thousands of community members who are now on a path to financial health that didn’t exist before.

This path might not exist if not for their credit union.

Creating better outcomes for members is an undeniable part of the credit union difference. Our challenge is to never accept anything less than financial well-being for all.

JIM NUSSLE is president/CEO of Credit Union National Association.

This article appeared in the Summer 2022 issue of Credit Union Magazine. Subscribe here.