Risk Based Lending Policy

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The purpose of this lending method is to price loans depending on the risk posed by the primary applicant to the credit union. The tiered structure of risk will be directly related to the primary applicant’s credit score and three variables that will be used to add or deduct provisional points so such score. The loans will be priced as follows:

Risk Tier	Credit Score Range	Rate	Personal	Collateral
A+	750 and above	Base %	$12,000	100% bottom line (not to exceed MSRP)
A	700 to 749	Base + 1%	$11,000	100% bottom line (not to exceed MSRP)
B	650 to 699	Base + 2%	$10,500	100% bottom line (not to exceed MSRP)
C	600 to 649	Base + 6%	$7,500	100% bottom line (not to exceed MSRP)

Provisional points will be added to an applicant’s credit score for the following:

• +10 for primary applicant if he/she has been a member of the credit union for 5 years or more
• +15 for primary applicant if he/she has been with same employer for 10 years or more or retired
• +15 for primary applicant if he/she is willing to set up repayment using payroll deduction or automatic draft

All loans will have credit score calculations recorded with each loan request (i.e. Checklist, Debt Ratio) If a member has a credit score of 599 or below, even after calculations, they cannot be granted a loan by TxDOT Credit Union loan officers, Credit Committee or Board of Directors. No exceptions will be granted.

Applicants in the C category must provide 3 current pay stubs when applying for a loan.

A primary applicant with no credit score will start with a base of 600.

Rates will be determined by the Board of Directors at each monthly board meeting.