Increased delinquency levels have spurred Erie Federal Credit Union to mandate that loan officers in charge of approvals make “introductory calls” to applicants with credit scores of 659 or lower, regardless of whether they are existing or new members. The policy change stemmed from a trend spotted in monthly collection meetings.
“The limited borrower, the one with very little credit scores, we found that they were defaulting on us,” Indirect Lending Manager Darlene Dolak told AFN. As such, Erie Federal uses the welcome calls to introduce itself to members, “trying to build a rapport with them before we even have the first payment due,” Dolak said. “It also helps us validate the phone numbers, because if it does go south of the border and our collection department has to make phone calls, we already know we’ve validated the phone number at the time of funding the loan.”
During the call, the Erie, Pa.-based lender confirms that the loan structure was not changed by the dealer, and that the applicant is clear on the terms. If everything checks out, Erie Federal will fund the loan.
The credit union, which has been providing auto loans to subprime members since 1999, began making the calls in the summer of 2014, so it is “too new” to say how much the procedure will aid in keeping delinquencies down, Dolak said. “Normally, if it’s going to go south, it goes within 18 months,” she said. “But it has cut down on our first-payment defaults.”
