This month, the State Employees Credit Union moved forward with plans to expand the use of credit scores to help determine loan rates. The change comes a few weeks after it three new board members who oppose the practice were elected.
It's called rate-based lending or tier-based pricing. Those with better credit scores get better rates on their loans, and for decades SECU has resisted the practice. Instead, it offered just one rate to all of its members. Earlier this year, SECU applied the practice to car loans, and now in November, the credit union has expanded it to all of its loan products except for salary advances.
The practice was a central issue in SECU's October Board of Directors election, in which three challengers who oppose rate-based lending unseated the board's incumbents. More than 2.7 million North Carolinians are members of the credit union.
Those opposed to the practice say those with lower credit scores will have to pay more in interest than under the previous flat-rate model. CEO Leigh Brady defended the change saying members with higher credit scores were shopping elsewhere, to the tune of more than $50 billion dollars. I'm Ryan Shaffer.
