1 Purpose
This policy governs the extension of consumer credit to members of the Credit Union. It sets the standards under which consumer loans are underwritten, priced, documented and reviewed, consistent with applicable law and the risk appetite set by the Board of Directors.
2 Scope
This policy applies to all unsecured and secured consumer loans, lines of credit and credit cards offered to members, other than real-estate-secured credit, which is governed by the Mortgage Lending Policy.
3 Roles and responsibilities
The VP of Consumer Lending owns this policy and the procedures under it. The AVP Compliance reviews every change for regulatory applicability before it is submitted to the Board. The Board of Directors approves the policy and any material change.
4 Underwriting standards
4.1 Purpose
The Credit Union extends consumer credit to members on a safe and sound basis, consistent with applicable law and the risk appetite set by the Board of Directors.
4.2 Minimum credit score
Applicants for unsecured consumer loans must have a minimum qualifying credit score of 660. Applications below the minimum are declined unless an exception is approved under section 4.6.
4.3 Credit history
Credit history is evaluated for similarly qualified applicants on a consistent basis. On the applicant's request, the Credit Union considers information that tends to show the credit history does not accurately reflect the applicant's creditworthiness.
4.4 Minimum income
Applicants must demonstrate gross monthly income of at least $2,500. Income is verified in accordance with the Loan Documentation Procedure.
4.5 Debt-to-income
Total debt-to-income may not exceed 45 percent at origination.
4.6 Exceptions
Exceptions to sections 4.2 through 4.5 require written approval from the VP of Consumer Lending and are logged in the Loan Exception Procedure.
5 Pricing
Rates are set by the Asset-Liability Committee and applied by risk tier. The same tier yields the same rate for every applicant; no pricing discretion is exercised at the branch.
6 Adverse action
Applicants are notified of action taken within 30 days of a completed application. A notice of adverse action states the specific principal reasons for the action, in accordance with the Adverse Action Review Procedure.
7 Review
This policy is reviewed annually, and whenever a regulatory change affects it, by the AVP Compliance and the VP of Consumer Lending.