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Changes in Credit Score Calculations - Know Your Score! |
In the world of borrowing, you are your
credit
score. With the availability of credit scores
on the
Internet and more people being aware of
identity theft,
the once mysterious credit score has
become more
consumer friendly. Keeping up to date on
any
changes to credit score policy is vitally
important. This
spring Fair Isaac Corporation, the company
that
determines your credit score, is revamping
its scoring
model. The hope is that the new scoring
model will do a
better job in predicting borrowers' default
rate. So
what, you may say. Well, it's important for
you to know
these details.
First, let's define a credit score:
- A highly specialized risk assessment
based on
the information supplied solely within a
single credit
repository (Experian, Transunion,
Equifax).
- A "snapshot" of a consumer's credit
profile at the
particular point in time that the credit report
is obtained
from a repository.
- A summation of risk of repayment of
debt by a
consumer based on the repository's credit
profile as
ranked against all other consumers with
credit.
Credit bureau scores range from
approximately 300 -
850 points -- the higher the score, the lower
the risk of
default. A credit score is calculated by the
repository's
software and is based solely on the good
and bad
data within the consumer's credit
file.
The score is made up of 40 different
variables to
determine the risk. It takes into
consideration:
- the level of credit debt and payment
histories
- length of credit histories
- number of recent credit openings and
inquiries
- type of credit used
It does NOT
take into account:
- occupation
- income
- length at current address
- race
- color
- national origin
- marital status
What's New
The new credit scoring model will be more
sensitive
to people with newer credit, also
called "young credit" or "thin credit," which
includes consumers without
much credit history and those seeking new
credit. Financial institutions want this
information in
order to ensure potential borrowers aren't
becoming
excessively obligated and over-extending
themselves.
Because banks, lenders and creditors are
changing
their underwriting guidelines almost daily, it's
more important than ever to work with
people
you know and trust. You always want to
make sure you
are getting the right information.
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April's Home Value Improver |
Make the Most of Small
Spaces
If your living arrangement allows you to sit
and read a
book while simultaneously making tea, you
know the
benefits of living in a small space. Think of
the real
estate agent's favorite euphemism about
small
spaces: cozy. If your small place is feeling
more
crowded than cozy, it's time to make some
changes.
Not only will you enjoy the new spacious
feel, you'll
likely increase your property value. Clutter is
an
immediate turn-off to potential
buyers.
When you've decided to make your small
home look
more open and airy, think about these tips:
- Remember the first time you realized
that the
produce at the grocery store only looked so
abundant because of a mirror behind it?
Well, the same
principle holds true for a small room. A
mirror will
make a room look bigger, especially when
reflecting
light from a window.
- Don't cover up windows. Allowing the
outside in is
not only pleasant, it makes a room appear
larger.
Curtain rods that extend beyond the window
let in
more light, too.
- Light colored paint will open up a room,
especially
if the entryway leading to that room is
painted a darker
color.
- If knickknacks are your passion, you
don't have to
say good-bye to your tiny frog statue
collection.
Instead, display your collection with some
purpose on
a nice shelving unit designed for just that
purpose.
- Be honest with yourself when deciding
what to
keep around. If
you're really tight on space and there is
something
you don't use, get rid of it. It doesn't have to
be forever,
but send it on a trip to the basement or other
storage
spot. I had a client who could not part with a
banana
yellow vinyl chair that her grandmother had
bought with green
stamps! Her living room is much more open
now, and
putting in a load of laundry in the basement
is a little
more fun now because she can visit the
chair.
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Got questions about real estate financing?
Contact
Debbie at Debbie@westchester-
mortgage.com or
617-965-1236. She'll consider them for
inclusion in a
future column. Debbie Siegel is president of
Westchester Mortgage in Newton, MA. She
is licensed
in several Northeastern states.
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You can't pick up a newspaper, go on line or
watch the news without being bombarded
with scary stories about the economy, the
housing market and the credit crunch people
are experiencing.
It's important to remember when taking in
these messages that the media's objective
is to sell advertising and increase readership
and viewership by creating drama and
excitement. So while there are real issues
we need to deal with, the reality is often not
as dire as the media makes it out to be.
Now more than ever, it's a good idea to work
with people you get referred to. People are
still buying and refinancing to get lower
rates. Houses are still selling for the asking
price (if priced right). The world really isn't
coming to an end - yet!
Please feel free to call or email anytime for
more information on any mortgage topic!
Best regards,
Debbie Siegel
President
Westchester Mortgage
P.S. You're receiving this E-Newsletter because you have a prior relationship with me or with Westchester Mortgage. If I've sent this to you in error, or if you want to remove yourself from the list at any time, just click the "SafeUnsubscribe" link at the bottom of this e-mail.
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Click here to read
my "Mortgage Minute" in
ForeclosuresMass.com's monthly
newsletter. This month's topic: "Economic
Stimulus
Package Ushers in Changes to the
Mortgage
Industry."
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