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Bank says no, then what?
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March 1, 2000: 5:11 p.m. ET
Credit unions may be a more 'bankable' option for small loans
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NEW YORK - If your local bank won't give you that much-needed loan, and you feel they treat you like a number because you don't have lots of money to let them play with, you might want to think about a credit union.
Teresa Duran, of Chacon, N.M., was a loan processor at the First National Bank in Las Vegas, N.M., earning $15,000 a year.
She didn't qualify for a loan at the bank that employed her because the bank's stringent requirements were too tight for the single woman, who commuted 100 miles to work every day.
Even though she was turned down by her bank because of a strict, faceless mathematical formula, Duran was upset at the rejection. So she then tried her local credit union. They not only approved her loan, they gave her a new lease on life.
"When I applied for a loan from that bank to buy a reliable car so I could get to work, which was a very long distance from my home, they denied me," she angrily recalls. "And I worked for them! Giving people loans!"
Changing direction
Duran approached the credit union to which her parents belonged, the Rincones Presbyterian Credit Union, and was approved for a small loan. She used it to buy a car and establish her credit. Over the following years, she applied for several other loans, further building her credit and eventually buying her first home.
First National Bank president Don Kelly says he couldn't speak specifically about Duran's case.
"Our criteria were different than the credit union," he says. "We're two different businesses with two different guidelines." Kelly recommends, when searching for a loan, "Keep trying at a bank, especially if you are a depositor."
Credit union leaders say a prime mission is to provide "character" loans, becoming a source of money for people who wouldn't qualify for a commercial bank loan. One key assumption is that a person's desire to repay is as important as repayment ability or income, they argue.
A struggling plumber who needs tools, an independent fisherman who needs boat repairs, or a father who glumly faces a mountain of bills for a child's hospital stay and can't meet a bank's qualifying criteria may have better luck at a credit union.
Banks cry foul
But bankers argue they are not the bad guys when it comes to the little guys.
"I don't necessarily think that credit unions are the friends of the low-income consumers. Things vary from institution to institution, and (Teresa Duran) might have gone to another bank that would have helped her, or perhaps another credit union which wouldn't have helped her," says Darrell McClendon, communications director for the Oklahoma Bankers Association.
"The idea that credit unions are the refuge of low- and moderate-income consumers is dubious. Unlike credit unions, banks are required under the Community Reinvestment Act to help meet the credit needs of low- and moderate-income individuals in their community. And the banking industry as a whole is dedicated to that task," says McClendon.
The Rincones Presbyterian Credit Union typifies the type of credit union that assists people usually sidestepped by commercial banks, say the credit union leaders: people like Duran.
Teresa takes over
After receiving her credit union loans, Teresa Duran began working for the RPCU, and in 1994, she set up its office in her modest, three-bedroom rural home.
Duran, who is bilingual, now assists people like herself from her small office, a tiny renovated bedroom.
"They just come to my house. We've made it much easier for these underserved people to get money to pay for things that other people take for granted. Tools. A refrigerator. A car. Doctor bills. And they own the credit union. We distribute our profits in many ways -- like insurance, dividends and low interest-rate loans to people who desperately need it."
The Rincones Presbyterian Credit Union was originally set up to serve the Presbyterian institutions in the northern section of New Mexico -- Mora, Taos, San Miguel, Rio Arriba and Colfax counties. Mora County, where the credit union is located, is ranked 48th in the state in per capita income. The county also has one of the highest unemployment rates in the United States. There are few economic advantages afforded the heavily Hispanic and Native American community.
"The credit union represents the only access to financial services for these people," Duran says. "The closest financial institutions are too far for these people to travel. We wish to promote thrift among our members, create a source of fair and reasonable rates of interest, and provide an opportunity to improve the members' economic and social conditions."
A better life
Duran cites the recent plight of a local middle-aged couple whose home burned down.
"They were retired, on disability, unemployed. Where were they going to get help? We were there for them, to give them the ability to better their lives. Credit unions give more people the opportunity to make something of their lives -- like I did."
Today, former bank loan processor Teresa Duran, who was a business major at the University of New Mexico, is the manager of a credit union with $1,003,000 in assets. 
--by Bankrate.com for CNNfn.com
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