In a Nutshell: The Service One Credit Union team understands that not everyone is in an ideal financial situation, which is why it works with members in Kentucky to find the products that fit their needs. Those include the Graduate Auto Loan, which helps high school and college grads secure the transportation they need to start their careers. Service One Credit Union also offers a variety of home loans, including the Welcome Home Mortgage Program, which enables credit-challenged borrowers to become homeowners. And the credit union encourages its members to establish a budget and compare rates and terms to ensure they’re getting the best loan.
According to the U.S. Census Bureau, the median household income in Bowling Green, Kentucky, in 2018 was $41,516. That same year, the national median household income was $61,139. That puts Bowling Green’s median income at 67.9% of the national average. The census also reports that the poverty rate in the city was 25.2%, more than double the national rate of 11.8%.
As Vice President and Chief Credit Officer at Service One Credit Union in Kentucky, Mark Floyd is committed to ensuring that members don’t get left behind.
Floyd and his team at Service One work to improve the Bowling Green and Glasgow communities with financial wellness resources and inclusive products and services — including affordable loans for cars and homes. And members can apply for these either in person or online, whichever suits their needs for assistance or convenience.
As with any loan, credit scores play a role in the decision to extend funds, but Service One’s lending policy isn’t based exclusively on credit. Loan officers evaluate an applicant’s entire situation and try to find a product that meets their needs. If they can’t, representatives provide them with information and education that can help improve their financial situation so they can apply again in the future.
“If there are problems with the credit bureau score, and they are recent issues like collections or a missed payment last month, we’re going to counsel them,” Floyd said. “And we’re willing to work with people who have limited down payments and limited credit histories.”
Loan Officers Help Members Overcome Credit Challenges
Credit scores are crucial in the lending process. The scores reflect a consumer’s history of repaying debt, shows any outstanding debt, and a variety of other financial factors. Lenders carefully consider whose factors when calculating the potential risk of a particular borrower.
“Every loan decision starts with a credit score,” Floyd said. “But a credit score isn’t what we base our decision on, ultimately.”
When applicants have low scores, Service One representatives provide them with advice and information they can apply to help raise their credit scores. Common actions include paying off collection accounts and establishing a six-month history of timely payments on outstanding debts. Then, they can come back to Service One and reapply for the loan or credit card.
As a VP and Chief Credit Officer, Floyd creates Service One’s loan underwriting policy, manages loan programs and lending departments, and works with loan officers to find ways to get members approved for loans. But his busy schedule doesn’t stop him from taking the time, when necessary, to sit down and work directly with members.
“If members are having problems making their payments, there may be a time when I would need to sit down with them and try to find some way to work out the loan, whether that’s reducing their interest rate or finding better terms for them they can afford,” Floyd said.
Auto Loans Can Put Recent Graduates on the Road to Financial Success
The Graduate Auto Loan is one of Service One’s most popular programs. It is designed for recent high school or college graduates who may not have much — or any — credit history. As a result, they may not qualify for an auto loan.
Without a reliable automobile, those new members of the workforce may be unable to find or maintain employment. That, in turn, can make it even more difficult to build credit.
“We have a special program where we look at some other underwriting guidelines, and we will take a chance on those borrowers and help them purchase a vehicle. And of course, we offer lower-than-market rates in most cases,” Floyd said. “That’s been a pretty popular program over the years.”
To qualify for the loan, applicants must have no previous auto loans on their record, no derogatory credit, and a debt-to-income ratio of 38%. They also must be able to make a down payment equal to 5% of the vehicle’s total purchase price. They will also need to provide proof of education and meet additional income and employment conditions depending on their level of education.
Service One is willing to take a chance on those young, unproven borrowers; after all, just because they don’t have a credit history doesn’t mean they’re a bad risk. Sometimes, people just need a helping hand, which the credit union is willing to provide.
And Service One is enthusiastic about getting recent graduates on the road to a stronger financial future.
Mortgage Options Fit the Diverse Needs of Homebuyers
Homeownership, like auto ownership, can be an important component of financial stability. Unlike a car, which immediately begins depreciating, making mortgage payments each month builds equity in a home. Homeowners can borrow against that ownership stake in the event of an emergency, but the long-term goal is to pay off the mortgage and own the home outright.
Their history of timely payments improves their credit score and leads to full ownership of a significant financial asset.
Service One offers a variety of mortgage products that fit the needs and circumstances of individual borrowers. When considering an application, Service One uses the applicant’s credit score as a guideline rather than a strict barrier to borrowing.
“We’ve got several different mortgage and loan programs and types, whether they’re short-term adjustable-rate mortgages for someone who’s not going to be in their home long or a 10-year adjustable-rate mortgage. We offer the standard 15- and 30-year fixed products through a secondary market,” Floyd said. “The first step is to figure out what the member qualifies for and what kind of product they need based on the interview we have with them.”
One popular product Service One offers is its Welcome Home Mortgage Program, designed to help credit-challenged members achieve the dream of homeownership. To qualify, borrowers need a 680 credit score and the program allows them to borrow up to 100% on the home’s value.
“We wouldn’t loan 100% value to someone with a really low credit score. We’d want to counsel them first and help them get their score up,” Floyd said. “But, overall, we’re going to look at you as a person and not as a number.”
Providing Borrowing Tips and Insight from Lending Experts
In 2017, Bowling Green’s median household income was $39,901, and that average rose about 4% in 2018 — which is a good sign for the personal finances of residents. But regardless of shifts in the economy, Service One Credit Union will continue to help its members make smart decisions with their money.
Service One offers personalized information to applicants based on their financial records and needs. But seeking funds for a major purchase isn’t a prerequisite for learning more about financial products, and Floyd has plenty of good advice for consumers to keep in mind.
When shopping for anything, the most crucial component is your budget, Floyd told us. If you’re in the market for a loan, stop into a credit union and talk to a representative; they can help you determine what you can afford. That way, you can avoid going out, finding a car or a home you like, deciding it’s the perfect one for you, and then discovering it’s out of your price range.
“If you’re not well-versed in financial literacy, then you may need someone to give you an idea of how much car you can afford and what your budget looks like,” Floyd said.
And once you know what you can afford, don’t take the first loan that’s offered to you. Instead, it would be best if you did some comparison shopping; check with other lenders, see who can provide you with the best deal, and avoid getting suckered into a bad one.
“Always talk to a credit union and see what kind of rate you can get,” Floyd said. “It’s probably going to be better than what you can get anywhere else.”