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DALLAS – Having a low credit score doesn’t necessarily mean a member is a poor credit risk. Allied Solutions has partnered with Capital Lending Strategies LLC to create a software product – Alternative Lending – that allows credit unions to identify members who probably are good credit risks even though they may not have high credit scores. Allied Solutions EVP Dick Hetzel said the software gives credit unions the ability to help members rebuild their credit scores with reasonably-priced loans. It also makes good business sense for credit unions because Alternative Lending takes some of the risk out of loaning money to so-called `high risk’ borrowers, he added. Alternative Lending software is based on the assumption that many borrowers with lower credit scores may be good risks and their low score is the result of unplanned personal experiences such as illness or divorce or represents spending habits that have been corrected. By looking at several hundred variables in a person’s credit history, the program identifies those members who are likely to be a good credit risk in the future. So the member’s credit union can charge the borrowers lower rates for loans than other lenders would. Alternative Lending includes collateral value insurance, which lowers the credit union’s risk in case of default in an auto loan. CVI reimburses the credit union for the difference between the amount generated by the sale of a repossessed vehicle and the amount owed by the defaulting borrower. CUs can also earn a partial refund of the up-front CVI premium.

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