Bank balking? Try a credit union
your local bank won't give you that much-needed loan, and you feel
they treat you like a number because you don't have lots of money
to let them play with, and on top of that it feels like there's
nowhere to turn, you might want to think about a credit union.
Teresa Duran, of Chacon, N.M., was a loan processor
at the First National Bank in Las Vegas, N.M., earning $15,000 a
She didn't qualify for a loan at the bank that
employed her because the bank's stringent requirements were too
tight for the single woman, who commuted 100 miles to work every
Even though she was turned down by her bank
because of a strict, faceless mathematical formula, the petite Duran
was upset at the rejection. So she then tried her local credit union.
They not only approved her loan, they gave her a new lease on life.
"When I applied for a loan from that bank to
buy a reliable car so I could get to work, which was a very long
distance from my home, they denied me," she angrily recalls. "And
I worked for them! Giving people loans!"
Duran approached the credit union to which her parents belonged,
the Rincones Presbyterian Credit Union, and was approved for a small
loan. She used it to buy a car and establish her credit. Over the
following years, she applied for several other loans, further building
her credit and eventually buying her first home.
First National Bank president Don Kelly says
he couldn't speak specifically about Duran's case.
"Our criteria were different from the credit
union," he says. "We're two different businesses with two different
Kelly recommends, when searching for a loan,
"Keep trying at a bank, especially if you are a depositor."
Credit union leaders say a prime mission is
to provide "character" loans, becoming a source of money for people
who wouldn't qualify for a commercial bank loan. One key assumption
is that a person's desire to repay is as important as repayment
ability or income, they argue.
A struggling plumber who needs tools, an independent
fisherman who needs boat repairs, or a father who glumly faces a
mountain of children's hospital bills and can't meet a bank's qualifying
criteria may have better luck at a credit union.
But bankers argue they are not the bad guys when it comes to the
"I don't necessarily think that credit unions
are the friends of the low-income consumers. Things vary from institution
to institution, and (Teresa Duran) might have gone to another bank
that would have helped her, or perhaps another credit union which
wouldn't have helped her," says Darrell McClendon, communications
director for the Oklahoma
"The idea that credit unions are the refuge
of low- and moderate-income consumers is dubious. Unlike credit
unions, banks are required under the Community Reinvestment Act
to help meet the credit needs of low- and moderate-income individuals
in their community. And the banking industry as a whole is dedicated
to that task," says McClendon.
One of the arguments commercial banks have offered
in arguing for tighter regulations for credit unions is a claim
that credit unions will sometimes spend their money on lavish offices.
But Duran's credit union, which serves Mora County, N.M., one of
the most economically depressed areas in the country, does not have
lavish digs. The office is in Duran's home.
The Rincones Presbyterian Credit Union typifies
the type of credit union that assists people usually sidestepped
by commercial banks, say the credit union leaders: people like Duran
who need a financial break and would not necessarily get it from
a traditional lending company.
After receiving her credit union loans, Teresa Duran began working
for the RPCU, and in 1994, she set up its office in her modest,
three-bedroom rural home, which proved more convenient for the impoverished
locals than the prohibitive 50-miles-from-home commercial alternative,
where they would only be shunned.
Duran, who is bilingual, now assists people
like herself from her small office, a tiny renovated bedroom.
"They just come to my house. We've made it much
easier for these underserved people to get money to pay for things
that other people take for granted. Tools. A refrigerator. A car.
Doctor bills. And they own the credit union.
"We distribute our profits in many ways -- like
insurance, dividends and low interest rate loans to people who desperately
The Rincones Presbyterian Credit Union was originally
set up to serve the Presbyterian institutions in the northern section
of New Mexico -- Mora, Taos, San Miguel, Rio Arriba and Colfax counties.
Mora County, where the credit union is located, is ranked 48th in
the state in per capita income. The county also has one of the highest
unemployment rates in the United States. There are few economic
advantages afforded the predominantly Hispanic, tri-cultural community;
there is also a Native American population.
"The credit union represents the only access
to financial services for these people," Duran says. "The closest
financial institutions are too far for these people to travel. We
wish to promote thrift among our members, create a source of fair
and reasonable rates of interest, and provide an opportunity to
improve the members' economic and social conditions.
"Getting that first loan gave me an opportunity
to make something of myself. And now I'm in the position to do that
for other people."
Duran cites the recent plight of a local middle-aged couple
whose home burned down.
"They were retired, on disability, unemployed.
Where were they going to get help? We were there for them, to give
them the ability to better their lives. Credit unions give more
people the opportunity to make something of their lives -- like
Today, former bank loan processor Teresa Duran,
who was a business major at the University of New Mexico, is the
manager of a credit union with $1,003,000 in assets.
Robbie Woliver is a freelance
writer based in New York
To comment on this story, please e-mail the Bankrate.com
-- Posted: March 1, 2000