Industrial CU Teams With Filene to Pilot LIFT Program

Industrial Credit Union in Bellingham, Wash., is one of five credit unions piloting a program in conjunction with the Filene Research Institute to study auto loans held by members with low credit scores.

The Lower Interest for Timeliness program—also known as LIFT—is an initiative that will reward credit union members with low FICO scores for making loan payments on time. The program is being funded through a grant from the Center for Financial Services Innovation. The University of Wisconsin-Madison’s Center for Financial Security will study the loans and the program’s overall impact, with results scheduled to be published in 2013.

The program was developed by Filene’s i3 initiative, which pushes a team of credit union experts to develop new products and services based on specific, targeted efforts. LIFT was created when the team was challenged to develop a product for members whose credit score and financial well-being had been impacted by the recession.

Matt Vance, the marketing and community manager for Industrial, heard about the program and contacted a colleague at Filene for more details.

“Their whole point is to see, ‘Will an incentive have an impact on borrowers’ repayment?’” Vance said. “It’s a concept that we’ve wanted to do for quite some time, but we never had the technology in house to be able to have it be not such a manual process. The technology and software that Filene developed is what truly brought us to this product, because it is something that streamlines and taps right into our database and does a lot of the work for us.”

LIFT rewards members with interest rate reductions when they are on time with a certain number of consecutive loan payments. Vance said that the initial benefit will be a 0.25-percent reduction after three months. In addition to providing an incentive for timely payment, decreased interest rates also effectively shorten the life of the loan, giving borrowers an opportunity to see real long-terms savings.

“It is a fantastic experience to see an i3 idea get into the field for testing,” said Denise Gabel, Filene’s chief innovation officer. “The LIFT program will provide credit-challenged consumers with the help they need, while managing the inherent risk in doing so.”

Industrial plans to launch the program at each of its branches before the end of the year, with a goal of between 200 and 250 loans per institution.

The other credit unions piloting LIFT during its research phase are Del Norte Credit Union, Santa Fe, N.M.; Innovations Credit Union, Panama City Beach, Fla.; Public Service Credit Union, Denver, Colo.; and Vermont Federal Credit Union, Burlington, Vt.


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