Beyond the Score

 Will CUs continue to take the high road and listen to members’ stories?

February 20, 2012

Hopefully it’s OK to say that the worst of the recession is behind us. At least, that’s what all the data and experts keep telling us.

The problem is, for many consumers, the true difficulties are just beginning.

Imagine this scenario: A married couple (Joe and Jenny) with two children live in the Midwest. They both work and they own a modest home. They aren’t frivolous or irresponsible and they pay their bills on time.

Joe and Jenny have some credit card debt, but it’s nothing they can’t handle. They have access to more credit but because they don’t need it, they don’t use it. They’re living the quintessential American life.

Then the boom lowers. With the down economy, customer demand at Joe’s company decreases sharply. Joe, who works at the company’s manufacturing plant, gets word that the plant is closing to “cut costs.”

Joe’s supervisor says he’s very sorry, but Joe doesn’t have a job anymore.

A few weeks later, Jenny learns that her company is closing altogether, so she, too, is out of a job.

Now Joe and Jenny have no jobs, but what do they still have? Yes—two children, a mortgage, other bills to pay, and lots of fear and anxiety.

After all, unemployment benefits only last for so long and they don’t come close to covering even the mortgage payment.

This goes on for weeks and months. Joe and Jenny try to find odd jobs, but there isn’t much to
be had. Unemployment benefits are almost at their end. Thankfully, the kids have enough food and the family still has a roof over their heads.

But all the stress is taking a toll on their once happy marriage. Their health begins to decline. They’re emotionally and physically exhausted.

A few months later, things finally start to improve. Joe and Jenny have full-time jobs again, the kids are happy, the couple is paying their bills, and everything seems to be looking up.

Subscribe to Credit Union MagazineNow Joe and Jenny go to the bank for a new-car loan. The loan officer looks at their not-so-stellar credit reports and breaks the bad news: Joe’s score is only 650 and Jenny’s is 665. Neither meets the bank’s threshold of a 685 credit score.

Joe and Jenny try to explain their story to the loan officer, but he has his marching orders. They simply don’t qualify for an auto loan at the bank. It’s the score that matters, you see. The story is only a story.

Now story time is over. This scenario or eerily similar ones will play out many times in the next five to 10 years. Through no fault of their own, and due to circumstances beyond their control, consumers have seen their credit ratings take enormous hits.

When the storm finally breaks, will credit unions join in the “business as usual” parade and value score over story? Or will credit unions continue to take the high road and actually listen to their members? Credit unions have become very good at listening. Let’s hope it continues.

If not, damaged credit scores will prevent otherwise-qualified individuals from accessing the credit they need to start purchasing things again. I’m pretty sure I’ve heard an economist or two say that we need consumer spending to jump-start the economy.

The housing market, for example, will only improve when people start buying houses again. Unfortunately, so many would-be homeowners went through the Joe and Jenny scenario and no longer qualify for mortgages.

Will credit unions have the courage to put credit story before credit score?

SEAN McDONALD is director of business development at Mid-State FCU, Carteret, N.J., and chair of the CUNA Marketing & Business Development Council. Contact him at 201-920-9328. For more information about CUNA Councils, visit