While consumers often turn to financial institutions for mortgages, Seattle Credit Union is expanding the field of real estate related credit products by offering a loan product for renters.  

Richard Romero, president and CEO of Seattle Credit Union, said renters are a customer segment that often requires assistance. High credit scores are not a prerequisite. With the rental loan, Seattle Credit Union can reach a new customer segment. The loan is open to anyone who lives, works or attends a place of worship in Washington, and the credit union does not require proof that members are moving there.  

The credit union pulls traditional credit reporting data, including income information. Although it uses automated underwriting tools, rejected applications are sent to staff members for further review; if an applicant has weak credit, Romero said underwriters will ask members for further information. 

The credit union also considers high cost, one-time expenses and the impact they have on an individual’s creditworthiness. Although the terms vary, Romero said the average loan lasts between 36 and 60 months, with interest rates ranging between 8.99% and 20.99%, and averaging 12.9%. He estimated the average loan is around $3,000, and applicants can receive same-day approval. 

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Seattle Credit Union’s rental loan offering is part of a larger effort to expand its reach to a broader customer base. The institution is also upgrading its in-branch experience. New branches don’t have teller lines, but instead feature interactive teller machines that handle basic functions. Meanwhile, private offices are designed for discussions with members about complex financial decisions.  

So far, Seattle Credit Union has processed about 80 applications, and approved approximately half. Although the credit union didn’t do any beta testing with the loan, it conducted market research with branding and marketing company Twenty Four 7, relying on focus groups, surveys and housing statistics. 

The average 12.9% interest rate for the renters loan is only slightly below the average credit card APR, which, according to data from the Federal Reserve, was 14.9% during the fourth quarter of 2019.  

John Christianson, owner of the Bellevue, Wash.-based Highland Private Wealth Management, told Seattle local news station Q13 the loan is an expensive option, saying, “You’re not far away from credit card interest rate [sic]. Those are very short-term solutions to a longer term problem.” 

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