Financial institutions are great with sticks. Slow to pay? Whack! Late fee. Thirty days late? Whack! There goes your credit score. This system of penalty, punishment, and pain was designed to encourage borrowers to repay loans as agreed, but it is neither encouraging nor effective. Where are the carrots? Where’s the reward for borrowers who pay as agreed? Where’s the incentive for consumers to outperform their credit scores?
LIFT (Lower Interest For Timeliness) is a loan feature that reduces loan interest rates when members make on-time payments. By giving borrowers a chance to earn their way to more affordable credit, LIFT helps credit unions drive down delinquency, improve member satisfaction, and gain confidence in lending to seemingly riskier borrowers.
The LIFT Administration application is completely customizable by the credit union to configure all the necessary components for automating the administration of the feature. This back office component is designed to take in a standardized extract file of qualified loans from any core system, determine action on qualifying loans, and return an import file to update loan rates back to the core system. The interface also provides the credit union’s staff the ability to research the status of loans in the program. The application also features an automatic email notification tool for the credit union. The application communicates through the credit union’s email server, and offers customizable templates for both a six-month letter of encouragement and a 12-month congratulatory letter.
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