How can NFCU afford to be so generous?

[IWOL]

Ive noticed after reading about peoples approvals with NFCU how generous they can be with credit lines despite fairly low scores.

I was just wondering how they can afford to be so much more genereous than other banks/CU and not have a high amount of defaults?

[BootStraps]

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@IWOL wrote:

Ive noticed after reading about peoples approvals with NFCU how generous they can be with credit lines despite fairly low scores.

I was just wondering how they can afford to be so much more genereous than other banks/CU and not have a high amount of defaults?

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Most of NFCU's customers are active duty military. When I was in the Navy, if a person defaulted on a loan while on active duty that person's Command will force him/her to pay it.

I'm not sure if the policy is the same as it was when I was in, but I'm guessing that it is if they are having that level of sucess.

[sailor_mercury]

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@BootStraps wrote:

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@IWOL wrote:

Ive noticed after reading about peoples approvals with NFCU how generous they can be with credit lines despite fairly low scores.

I was just wondering how they can afford to be so much more genereous than other banks/CU and not have a high amount of defaults?

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Most of NFCU's customers are active duty military. When I was in the Navy, if a person defaulted on a loan while on active duty that person's Command will force him/her to pay it.

I'm not sure if the policy is the same as it was when I was in, but I'm guessing that it is if they are having that level of sucess.

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I agree.  My husband has not been in the Navy since 2001 but BK or default was VERY VERY rare in the active duty community.  Military retirees tend to have significant savings and strong cash flow with a retirement income and a secondary income as well.  The member base and deposits are strong and overall risk is low.

[USF813]

I frequently ask myself the same thing, as they've been very kind to me despite a BK that's less than five years old. I suspect, with the recent military cuts announcement, that they may start tightening up a bit on the generosity.

[IWOL]

That makes sense for the active duty members but surely a large portion of their membership are spouses, family and household members as well.

Also, the other military CU's like USAA and others are not nearly as genereous as NAVY. Im sure they know what they are doing, it just seems like they hand out large credit lines laike candy, even to people with past patterns of risky behavior.

[studiogeek]

High limits don't cost them a thing unless the borrower defaults. It makes them money on the contrary. I don't read about many defaults or blacklists on NFCU cards. People tend to generally appreciate the relationship and take care of it. The exclusivity helps this perhaps.

[Leadberry]

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@IWOL wrote:

That makes sense for the active duty members but surely a large portion of their membership are spouses, family and household members as well.

Also, the other military CU's like USAA and others are not nearly as genereous as NAVY. Im sure they know what they are doing, it just seems like they hand out large credit lines laike candy, even to people with past patterns of risky behavior.

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USAA is a bank, not a credit union.

While I'm no expert, I would think that the not-for-profit status of credit unions, which makes them exempt from corporate income taxes, frees up more cash for them to lend to their members.

[Anonymous]

So, not quite the same, but talking about NFCU 100% mortgages:  http://www.bizjournals.com/washington/blog/2013/04/navy-federal-feeds-the-bubble-with-no.html?page=a...

Key quote: The credit union began offering these loans in 2005 but stopped in the middle of 2008 so that it could evaluate how well those mortgages performed. It found that its members didn't default at the high rates at which other institutions' borrowers did.

[dta]

In general, credit unions can have reduced lending risks due to cross-collateralization. If you default, they can take funds from your deposit accounts.

[RamRam86]

They are the largest credit union in the United states by far that's how they can afford to be so generous with their limits!