[April]

I’m looking to see how other banks determine the rate given on unsecured credit, where the borrower does not qualify for unsecured credit but they have a strong cosigner. We have tier based pricing and on any other loan we do not determine rate based on cosigner.

Topic

[JGo9]

April,

When you say cosigner I’m assuming you mean you have two people on the loan and not one borrower and one guarantor.

In the situation you have outlined we would give them the rate the borrower qualified for which had the highest credit score. I would recommend you be consistent in your practice on assigning rates so you don’t run into any kind of Fair Lending issue. I would recommend having something in policy to address how your institution handles this to assist you in being consistent.

To adjust your situation slightly, if you had a borrower with poor credit and you had a guarantor with good credit, we would base the rate on the borrower with poor credit.

I hope this helps!

[Author]

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