The best way to establish the borrower’s credentials is to build a relationship with them, so that they may establish a track record that speaks to their competence and prudence. However, big banks with wide networks find it difficult to do this in today’s dynamic world. Instead they must rely mainly on rules of thumb, credit limits, credit scoring, collateral, and similar tools.
Credit unions have an inherent advantage in this regard, because your institution is structured around the relationships of your members to each other, to the credit union, and, most often, to some other institution or location, be that a church, profession, workplace or town or village.