MCUL Community Reinvestment Initiative: About CRI: CRI Strategic Areas: COOL Cities: Risk Based Lending

	- CRI Strategic Areas
	Financial Education Council Modest Means Council Economic Solutions Council Affordable Lending Programs Home Loan Payment Relief Program Michigan State Housing Development Authority (MSHDA) Risk Based Lending StretchPay Loan Career Transition Program Public Communications Working Group CU Access and Growth Working Group CRI Programs and Initiatives

CRI Home Page > About CRI > CRI Strategic Areas > Economic Solutions Council > Risk Based Lending

Our Commitment to Affordable Lending (Economic Solutions Council)

Risk Based Lending

Risk-based lending involves setting a tiered pricing structure that assigns loan rates based upon an individual’s credit risk. Risk-based lending generally has the most significant benefit for two broad categories of borrowers:

members attempting to “repair” their credit due to the previous mishandling of credit
members attempting to establish credit

Although the rates paid by borrowers with less than perfect credit histories are higher than rates paid by borrowers with strong credit histories, these members are able to obtain loans without paying the excessive fees charged by many alternative “financial providers” such as finance companies, rent-to-own stores, title loan companies and pawn shops.

60 percent of credit unions that responded to the CRI Survey are engaged in risk-based lending.

Community Reinvestment Initiative Mission Statement
	"To bring together public and private entities to explore opportunities for strengthening communities by improving the financial well being of Michigan residents with an emphasis on underserved areas."