9 Steps To Jump-Start Your Loan Portfolio

After years of monitoring delinquency and losses, and dealing with declining loan portfolios, it’s time to get back to the business of lending.

Here are nine steps to jump-start your lending efforts:

1. Be proactive with auto loans. Offer a reduced rate to members with low balances on their current auto loans for their next purchase.

If you can steer your members to a car dealer with which your credit union has a relationship, it might help differentiate your credit union from all of the “cheap money” lenders out there.

2. Review existing home equity lines of credit (HELOC) and consider offering special incentives on new advances to members with low levels of credit-line utilization. These loans have already been booked and you’ve already expensed most, if not all, of the origination costs.

Most credit unions have activation and utilization strategies for their credit card portfolios. It’s time to have similar strategies for HELOCs as well.

3. Focus on high-potential accounts for unsecured lines of credit. These aren’t “slam dunk” borrowers who have 760 FICO scores and owe little on their credit lines; they’re members with credit scores around 670 who owe 80% or more of their cumulative revolving lines, and owe within $500 of their credit lines.

Making a credit-line decision on these high risk/reward accounts requires more than a FICO score—it requires multi-attribute credit evaluation.