Alison Heller, Sales Director for Consumer Finance, Equifax
Across the credit union landscape, affordability has become one of the defining challenges of 2025. Inflation, shifting interest rates, resumed student loan repayments, and slow wage growth continue to erode consumers’ disposable income, leaving many households struggling to balance everyday expenses with mounting debt obligations.
Against that backdrop, credit unions are seeing growing demand for unsecured personal loans as members look for alternative funding sources for major expenses, from auto and home repairs to tuition or medical bills.
This trend highlights the ongoing need for flexible, member-centric lending options, as well as the opportunity to include additional data alongside traditional credit scores to assess a borrower’s financial health.
Economic pressures drive unsecured loan growth
For years, homeowners could tap into low-rate home equity to manage large or unexpected expenses. But with the combination of today’s higher interest rates and emerging challenges surrounding affordability, that option has become less accessible. As a result, consumers are increasingly turning to unsecured personal loans to cover their financial needs.
Credit unions are responding by expanding their unsecured lending programs to offer more competitive rates, flexible terms and digital application processes. Yet, as volume increases, so does exposure to risk. Members who look financially stable on paper may still be feeling the strain of higher living costs or variable income streams. For lenders, this presents the ideal opportunity to supplement the traditional credit score with additional data to assess repayment ability confidently.
A more complete view of “ability to pay”
Credit scores are considered the gold standard in determining a member’s creditworthiness. And in a period of sustained economic pressure, when competition for loans is high, having access to more data can become a key differentiator for credit unions. By incorporating alternative data and verified income and employment information alongside credit score, credit unions can gain a broader view of a member’s ability to pay.
Alternative data can include rent and utility payment history, as well as specialty finance data, which is particularly important for younger members, new borrowers or those with limited credit histories who might otherwise be deemed “thin file” or unscorable.
Verified income and employment data, when combined with alternative and traditional credit data, enable credit unions to evaluate both a member’s credit history and their current financial stability. This comprehensive approach allows lenders to approve applicants confidently.
This strategy is especially valuable as credit unions that leverage these broader, data-driven insights can better serve members, support long-term financial wellness and strengthen trust by ensuring loans align with a member’s true repayment capacity.
Strengthening member relationships through responsible lending
Credit unions have long distinguished themselves by putting members first. Through modernizing their risk assessment strategies, they can continue that mission by offering access to needed credit while ensuring members aren’t taking on loans that exceed their financial comfort zone.
Layering verified income and employment data alongside traditional credit metrics aligns with the cooperative values that define the credit union ethos. It balances growth with care, supports fair and inclusive lending practices, and helps sustain affordability in an era when every dollar matters.
In times of economic strain, members need credit unions they can trust, and credit unions, in turn, need reliable third-party data they can trust. A fuller view of each borrower’s ability to pay provides both.