Payment Improvement Courtesy for Loans
There may be times when our borrowers fall behind in their payments, even though this was never their intent. Since on-time payments are the biggest factor affecting a credit score, missing a payment can make it harder to access credit in the future. The Payment Improvement Courtesy for Loans (PICL or “pickle”) program allows qualified borrowers who are two consecutive months late in a row to continue making payments without paying additional late fees and avoid detrimental reporting to the credit bureau.
There are times that a borrower might experience difficulty – a life event, a change of jobs, unforeseen medical expenses, etc. – that would cause them to fall behind in their payments, even though this never was their intent. Once their situation has stabilized, they may find that they can make the regular monthly payments but are unable to bring their account totally current. In these instances, we offer them the Payment Improved Courtesy for Loans (PICL or “pickle”) program to bring the account back to current status.
The PICL program allows qualified borrowers who are two consecutive months late in making a payment to continue making payments without paying late fees and avoid detrimental reporting to the credit bureau. It brings the account back to current status without changing the term, rate, or monthly payment amount on the loan. Once the PICL Program is applied, it is the obligation of the customer to keep the account in current status going forward. If, after entering the Program, the account becomes 60-days delinquent again, the Program is discontinued, and the previous account delinquency will be reversed and added to the new delinquency to determine the account delinquency status. For example, if the account is 90-days past due and the PICL Program is applied to bring the account current and subsequently the customer again becomes delinquent 60-days past due, the PICL will be removed and the account will be considered 150 days delinquent.
During the COVID-19 pandemic, we saw that many borrowers needed greater flexibility as they adjust to the present economic hardship and employment opportunities. Thus we expanded the flexibility of the PICL program to extend the benefits to more borrowers. Under COVID-PICL, accounts that become past due 60 days will not reverse, providing the needed flexibility. Many of those who utilized COVID-PICL were able to make financial adjustments and shortly returned to current payment status.
From August 2017 to November 2020, 380 borrowers have used the PICL program. 291 additional borrowers have used the COVID-PICL program, which began from March and continues to be active (as of December 2020).
Since Aug 2017, only 85 PICL accounts (22%) have had to go through PICL reversal, meaning the PICL program has been largely successful in supporting our borrowers during times of financial hardship and avoid falling behind in making payments.
utilized PICL program
utilized COVID- PICL program
The PICL program helps borrowers who are struggling for a period of time, but is not a long-term fix. For those borrowers who have a root cause of late payment, we work with them to identify the issue and decide whether it is a good decision to go into PICL. We also explore with the customer making a new payment plan or arrangements to address the real cause of missing payments. At times, all it takes is a review of the payment history and offer of a due date change to the customer to avoid late payments and a late fee.
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