A Better Way to Manage Credit Risk: Predictive Analytics

Credit unions have always prioritized relationship-based lending. You know your members, understand their needs and step up as you can when they’re facing financial hardship. But as members’ financial lives become more complex and unpredictable, traditional risk management tools aren’t keeping pace.

To continue delivering on the credit union mission and protect your loan portfolio, embrace new tools: predictive analytics and real-time monitoring.

These innovations help credit unions identify emerging risks earlier, respond more effectively and serve members more equitably, especially those with thin or no credit files, which tend to be the young adults and historically disadvantaged.

The Limits of Traditional Risk Models

Most underwriting and monitoring systems rely on static, backward-looking data: credit scores, payment history and quarterly performance reviews. But these don’t reflect the reality for many members today, especially those in gig work, experiencing income volatility, or recovering from financial shocks.

In fact, the Consumer Financial Protection Bureau reported in 2015 (latest data corrected in 2025) that 80% of adults in the US have a credit score at one of the leading credit bureaus. However, “An additional 19.4 million Americans, representing 8.3% of the adult population, have credit records that cannot be scored. These are almost evenly split between consumers with credit records that are insufficient unscored (9.9 million) and those that are stale unscored (9.6 million). The remaining 11% of adults, or about 26 million Americans, are credit invisible.” Many of these individuals are young Gen Zs, recent immigrants or those who prefer to avoid credit cards and loans.

Salus was founded after we witnessed a situation in our lives where someone couldn't find help.

Even for members with a strong credit score, a single unexpected event, like a missed paycheck or medical expense, can quickly change their ability to repay. By the time a late payment shows up on your reports, the window for a proactive, supportive solution might have slammed shut.

Member-Centric Approach to Risk

Predictive analytics enables credit unions to anticipate and address problems before they reach the point of no return. By analyzing changes in transaction patterns, income trends and other behavioral signals, these analytics can help identify members who might need assistance in the near term. Then, your credit union can reach out proactively to get a better understanding of the situation and offer potential solutions.

Pair that with real-time portfolio monitoring, and your risk team can track loan performance live rather than waiting for monthly or quarterly reports.

Together, these capabilities help you make smarter, more compassionate lending decisions. In the International Journal of Research Publication and Reviews research by the Olin Business School of Washington University in St. Louis, Mo., they found that “predictive analytics models are instrumental in credit risk assessment, enabling financial institutions to predict default probabilities more accurately.”

In fact, Salus’ data showed reduced default rates by 75% among the top 20% of subprime applicants. Additionally, 95% of borrowers who successfully paid back their microloans had subprime credit scores. Alternative data benefits your credit union and enhances your members’ satisfaction.

Why This Matters Right Now

The credit environment is shifting. Consumer debt remains near historic highs, inflation is squeezing household budgets and delinquencies are at the highest they’ve been in at least the last five years, according to Callahan & Associates.

One university research paper cited a 2023 McKinsey report that found that lenders using real-time risk monitoring reduced their risk exposure by up to 30%. For credit unions, this translates to fewer charge-offs and more opportunities to help members avoid financial harm.

When members feel supported during their most challenging times, their trust in your credit union deepens, resulting in increased share of wallet, better repayment behavior and long-term loyalty.

Protect the Portfolio, Serve the Member

Predictive analytics and real-time monitoring aren’t just about managing loan losses. They’re about making sure your credit union can keep doing what it does best: supporting members through life’s ups and downs.

Predictive analytics tools help your team focus on the right accounts at the right time, providing targeted support when it can make the most difference. The result is a more resilient loan portfolio and a stronger financial safety net for your community.

If your credit union is ready to leverage modern risk management technology while deepening your member impact, Salus is ready to help.

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