Strategy to help members increase their credit score and financial wellbeing pays off

There is a huge emphasis on building credit as a core component of financial health. However, more than 45 million Americans* have little to no credit and the credit-building solutions for them are lacking. Guided by its mission to help improve the financial health and well-being of its 400,000 members, Bay Area-based Patelco Credit Union set out to change that. Historically, if Patelco declined a loan application, it had little else to offer the member.

In 2020 Patelco declined more than 11,000 loans and had no alternatives to help these members get established or back on track. The credit union also looked at its member base and saw that approximately 38,500 members had a FICO score below the minimum to qualify for a loan and more than 8,000 members were without a FICO score.  Recognizing this gap, Patelco went to work exploring ways they could help almost every member – no matter where they are on their own financial journey.

Patelco serves a large group of people who live paycheck-to-paycheck, are new to the country, as well as college students – three diverse demographics that often need additional support to start building credit. The barrier to healthy credit was one of the first challenges Patelco confronted.

The second challenge was emergency savings – another financial milestone emphasized by financial institutions. Helping members build their savings is important for Patelco. In fact, the credit union measures success in part by how many members are able to have a minimum of $500 in reserve. Creating a two-for-one offering for members to establish healthy credit and savings habits was imperative.

From this two-fold challenge came a solution. Patelco partnered with Duke University’s Common Cents Lab, a financial decision-making research lab, to unpack the pain points that many people face when building or rebuilding their credit. The credit union was then able to create and test strategies to improve members’ credit and financial health.

The result: Patelco’s ScoreUp Credit Builder Loan. It is already proving to boost members’ credit scores and savings. In the first three months, 68% of members with the ScoreUp Credit Builder Loan saw an increase in their FICO score. So far, 80% of members that have taken advantage of the new lending program previously had no FICO score or a FICO score of less than 630. With 72% of ScoreUp Credit Builder Loan participants under the age of 45, Patelco is also engaging younger members and encouraging healthy financial habits.

Here’s how it works:

  • Patelco works with members to establish a manageable monthly payment program to create a positive credit-building experience – all while building a savings account.
  • Patelco launched a ScoreUp loan calculator to help members understand the right loan amount for them and how high of a payment they can realistically afford before applying for ScoreUp.
  • Once approved, funds from each loan payment are then put into a secured savings account, where they earn interest.
  • The member pays off the loan monthly and builds ‘equity’ in the savings account (similar to a home loan).
  • Once paid in full, funds are released back to the member, building credit and savings for a double win.

Patelco’s ScoreUp Credit Builder Loan was designed to help members establish or rebuild credit, so the barriers to entry are minimal:

  • Apply with little or no credit history, no cosigner required
  • No fee to open or set up the loan
  • Loan amounts from $500 to $5,000
  • Fixed low rate at 3.95% APR
  • Members choose a term that works for them, from 6 to 36 months

A key differentiator for this product is that Patelco Payment Assistance comes with every loan. So if a member can’t pay their monthly payments, the credit union closes out the loan without dinging the member’s credit – and any equity already built is released to the member.

Since launching the product in July 2020, Patelco more than 1,200 members have taken advantage of the ScoreUp loan – more than 120% of the volume the credit union was expecting.

Patelco credits the following strategies to the product’s success so far:

  • Working cross-functionally to build a robust and sustainable product and process.
  • Targeting existing members who were already declined for a loan, or those that had bad credit, little credit or no credit.
  • Thoroughly training branch and call center teams to be able to offer this solution to appropriate members and in appropriate situations.
  • Staying close to the feedback and reactions of members post-launch so that the credit union was able to refine its communication and approach – particularly within the digital space, as many members initially did not understand that they would not receive the loan proceeds immediately.
  • Partnering with a world-class research organization (Duke University’s Common Cents Lab in this instance) to ideate and iterate during the product development process, leveraging behavioral economics and research insights to inform the build and rollout.
  • Integrating the ScoreUp Credit Builder Loan into the regular loan approval process so that if a member is declined for the loan they’re applying for, there is a path to improve their credit for the future.

Helping people build their credit, savings and financial health in a positive way is paying off with Patelco’s ScoreUp Credit Builder Loan and it’s only just the beginning.

Currently, Patelco and Duke University’s Common Cents Lab are testing the ScoreUp calculator to understand if using a basic affordability calculator before formally applying for the ScoreUp Credit Builder Loan improves the members outcome and success with the loan – therefore maximizing the credit building potential of the loan.  The hypothesis is that simply by having the member calculate out what the loan will actually cost them, and ensure it fits within a basic budget with some slack, they won’t ‘bite off more than they can chew’ and will therefore stay with the loan longer (something that has plagued other credit builder programs where members drop out before the end of the term).

Patelco is also looking at what’s next for those who have paid off their ScoreUp loans and how they can continue to support and engage members with innovative products, using the success of the ScoreUp product as a beginning of a brighter financial future.

About the authors

Josh Garrison is vice president of consumer lending and cards at Patelco Credit Union.

Kipp Riesland is a senior program manager of financial wellbeing at Patelco Credit Union.

About Patelco Credit Union

Dublin, Calif.-based Patelco Credit Union is a not-for-profit credit union committed to serving the financial health and wellbeing of its membership. With more than 400,000 members primarily in and around northern California, Patelco is committed to improving their members’ financial well-being and fueling hope and opportunity for its members by offering personalized solutions, advice, and expertise that empower them to achieve personal financial freedom. Founded in 1936 with $500 in assets by employees of the Pacific Telephone and Telegraph Company, Patelco is in the top one percent of U.S. credit unions with more than $8 billion in assets. For more information, visit

Roughly 26 million Americans are credit invisible, meaning they have no credit history with a nationwide consumer reporting agency [Source: Consumer Finance]. 19 million Americans have credit history that has gone stale or is insufficient to produce a score under the most common scoring models [Source: Consumer Finance]

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