The 180 is more than a loan program - it is a chance for driven individuals to reverse their declining financial situation.
Bad Credit Can Happen to Good People
This statement is common, and for a percentage of people within the subprime FICO scoring range, it can be true. The problem with today's loan processing systems is that the majority of lending approval systems are only automated, which does not allow for a reasonable review or allowance for explanation.
Individuals with low credit scores may find that their situation prohibits them from buying a newer, low-mileage car, or having access to overdraft protection or a credit card for emergencies. When Tricon selects an applicant into The 180, this person has conveyed to the interviewer that that they are very interested in creating higher FICO credit rating for themselves. This type of personal commitment is what The 180 process looks for in individuals. We provide the tools and resources to help people help themselves - people helping people.
The 180 is turning back the hands of time to an old-school lending technique, one that helps good people turn bad credit around. For the first time, people who have suffered from bad credit, due to circumstances beyond their control, are given a chance to re-build their financial standing, and credit unions have the privilege and opportunity to be a part of their success.
Picking 10 Individuals Out of 100 - We Pick People Who Are Interested in Success
Computer programs do not effectively identify the 10 quality applicants in a pool of 100 subprime applicants. As the Tricon advisors talk through credit report issues with applicants, probing for reasons that contributed to their declined credit, a person's character becomes evident.
All loan applicants, after meeting the pre-established 180 underwriting requirements, sit down face-to-face with a Tricon advisor. The initial conversation will focus on the individual's FICO record from one of the three major credit reporting agencies, Experian, Trans Union or Equifax. The goal of this credit report review is to talk through apparent issues that have, in effect, lowered the person's credit score below a national average. This initial interview determines whether the participant is willing to adhere to the guidelines, and whether or not they fit the criteria for the program. Only those who can prove that they have a good history of making payments, but have simply suffered from outside forces will be admitted into the program.
Details of the initial interview include:
From this extensive personal interview a relationship based on trust and a commitment toward results is formed. This process of an old-school, face-to-face interview reveals the borrower's willingness to participate in this opportunistic program. It takes great commitment and belief from both parties involved to make this program work, and it all begins with a relationship built on trust.
- Determine Financial Standing: The TriCon runs a credit report to determine the borrower's current financial standing and credit score.
- Budget Creation: Many times, people with lower credit profiles are not very good at personal management issues. So, one of the most important roles Tricon plays in the approval process for The 180 auto loan is to determine how much an applicant can truly afford each month, without stressing his or her financial situation. Tricon's budget conversation with our auto loan applicants is designed to encourage and motivate people to pay closer attention to their spending. Each applicant interacts with a Tricon advisor to develop a personal budget. Much detail is derived by interacting with each applicant and asking questions that stimulate self- reflection on spending and spending habits. The fact is, individuals that spend more than they bring home will be poor credit risk and this fact is talked about with applicants. The personal budget process includes conversations about:
Once the applicant and interviewer complete comprehensive personal budget, a recommendation is formulated and recommended for an auto loan. Within The 180, the dealership never dictates monthly payment, only a Tricon advisor can approve an applicant's approval amount.
- Setting Priorities
- Creating an Ongoing Personal Budget
- Establishing Goals
- Online Spending Management (Mint.com, etc.)
- Ongoing Spending Reflection.
- Background Check: Once TriCon and the borrower come to an understanding about the borrower's goals and realistic capabilities in reaching those goals, a background check is run on the borrower. The purpose of this is to ensure the character, stability and willingness to adhere to the deadlines. TriCon will check:
- Driving History: Accidents, DUIs, etc.
- Employment History: A steady work history ensures responsibility and commitment levels, as well as, payment capabilities.
- Criminal Record: The 180 follows strict regulations, and does not allow felons or a person of bad character into the program. The 180 is strictly for good people with bad credit based on circumstances out of their control.
- Credit Report: A thorough credit analysis is done to check for charge offs, judgments, tax liens and whether or not the borrower has filed for bankruptcy. If any of these marks appear on the credit report the borrower must wait a period of time before continuing with the program.
The Process is Ongoing through the Touch Program
The Touch Program is a financial literacy self-help program that aids CU members who have already purchased a vehicle with a CU pre-approved loan and wish to improve their credit score rating and overall personal finances. This is the final, but continuous step in the The 180 program. Participants in the The 180 joined not only for a new car, but for the chance to achieve better financial standing and to learn ways to carry out what they have learned throughout the rest of their lives. The Touch Program helps them stay on track by checking in every three months for a year. In working with a TriCon advisor participants will:
Every three months for a year the TriCon advisor will re-evaluate the progress of the participant. If the client proves his or her commitment to the program they continue on. If however, they demonstrate a lack of commitment and effort, the client will be removed from the program. In this rare instance their car, which is equipped with a GPS tracking system and kill switch, will be located and removed from the individual's possession.
- Continue to follow their newly created budget.
- Set and achieve goals for accumulating savings every three months.
- Learn the details of their credit report and how to dispute certain blemishes.
- Make an effort to bring in extra income.
Conclusion: Why The 180 Works
The 180 is based on the belief that good people deserve a second chance at regaining a strong credit score. We believe in those who have been overlooked by other financial institutions as being too risky, and offer them a chance to regain pride within themselves, and to prove that they are not just a number. Tricon believes instilling pride and confidence in a person who has been knocked down and burdened with financial chaos is the number one factor in the success of this program. The strong bond made between the credit union and member will not only help the individual, but the institution as well.
- A relationship built on belief, trust and commitment to success between the credit union and participant instills pride within the individual and drives them to achieve their financial goals, not only for themselves, but for the people who believed in them.
- Credit unions will make more money by lending loans at a higher interest rate, but with lower risk. Whereas before the individual would have been turned away.
- It provides a chance for credit unions to provide higher quality customer service, and build a stronger community by involving members who generally would have been overlooked.