Tag Archives: credit score

Is There Hope For A Financial Reform In This Economy?

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The bills are stacking up, the creditors are calling, I’ve not recently gone out and bought a boat, nor a large house, in fact the rent on my little apartment is due and the land lord is saying enough, pay no or get out, what can I do? What would you do if it wasn’t your fault life just happened, let me explain-

One way to get around the limitation of a certain allotted income is to borrow money or receive credit- the typical way a person goes about using credit is through a credit card: a credit card is used to buy things and pay for them over time, like a loan, which is great but you have to remember that this money has to be paid back, and with interest and sometimes an added annual fee is added for using the card. Several decades ago consumers did little to no purchasing on credit except for purchasing a mortgage. But since World War II a high volume of consumers had started using credit, it started mostly with automobiles, and then higher mortgages, however today everything from a new car to a pack of gum is put on credit. The problem people have with getting into credit is that people spend more than they have, so when it comes time to pay that credit bill it means diving into that paycheck leaving less of a paycheck than they begin with because part of their income must be used to pay off the credit rather than for the consumption of expenditures.

Because of this life-changing event Bart has had to seek credit counseling and may have to file for bankruptcy. Why do bad things happen to good people? This question burns on my mind but until that gets answered I wanted you to know that there are companies out there that care and do help. Bart had great insurance and one of the benefits that came with his insurance was a company called Social Service Coordinators 866-279-3764 they are health advocates that listen!

The housing marketcrashed because too many easy loans were served on a silver platter with ridiculously low rates. Many saw this as a chance to upgrade to a larger, more expensive home, others saw this as a way to get into their first home, and truthfully it doesn’t matter why people chose to purchase a home the point is when it came time for these loans to be paid back at the higher interest rate people couldn’t do it, they were already pay check to pay check. After an outcry in the housing industry big government stepped in and did what was called a “bail out”, and the fallout was a break in the stock market- people found their dreams ruined, their financial security vanished, and their easy future turned to utter uncertainty.

History warns against overoptimistic, especially when the government over steps it’s fiscal policy. Large private investment is the foundation of rapid economic growth but when there is no accountability for failure we all pay.

Did the warning came too late, or we just did not heed the warnings that were all around us? It’s a question we must all ask ourselves, what is for sure is that when consumers are spending more than they make and credit lines are expanding something is going to burst and that is exactly what we are seeing today- little to no investments and or savings and a stock pile of debt. Maybe one should consider going back to the “good old days”?

When money is tight and you need health care assistance, everyone agrees you should contact Social Service Coordinators 866-279-3764 the leading health care advocates in the nation. They provide excellent member services which ensures a network of quality health care professionals.

Newly Implemented Credit Reporting Method, VantageScore Vs. FICO

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The VantageScore credit scoring system is compared with the old FICO system.

A new credit reporting system has just lately been implemented. Really a second system, I’m not sure if it will replace the old FICO score or not. The old FICO (Fair Isaac Corp) system had a range of 300 to 850 points. This system has been around for a long time , and good, bad, or incomprehensible it was the standard. If you were 720+ FICO, you should get good interest rates. I regard myself as a Houston Heights Realtor, banks love my clients with 720+ FICO scores.

The new VantageScore is more like a school report card. It has a numeric range of 501-990, and corresponding letter grades that we can all relate to: 900′s = A; 800′s = B; down to 500′s = F.

The advantage is obvious: the range is not as narrow as the previous system; and it’s A-F is straightforward to understand. Even your children can explain it to you.

Both system should rate people similarly. If you had great credit before, that won’t change, and vice versa. Where it may help, is for people with little credit history. The old system gave 15% of its score to credit history…little history (not running up plenty of mastercards) could hurt you. This term does not show up in the new system.

Here are the rough categories utilized by each:

Old FICO Score

– Payment History: 35%
– Age of Credit: 15%
– Credit Balance: 30%
– Credit Type: 10%
– New Credit: 10%

New VantageScore

– Timely Payment: 32%
– Credit Utilizationi: 23%
– Account Balance: 15%
– Credit Depth: 13%
– Recent Credit: 10%
– Available Credit: 7%

The new VantageScore system was developed jointly by the 3 credit reporting agencies TransUnion, Experian and Equifax. Because all 3 agencies will now use the same system, scores from all 3 agencies should be closer together. Previously each agency calculated their scores differently. Now, the details of how scores are calculated are still confidential, but the main points are disclosed above.

The old rules still apply: It’s good to have available credit, but not excessive; it’s good to use credit, although not foolishly.

No system is foolproof. My Dad, who passed away a few years ago, never had a Visa card or charge account. He paid cash for everything; auto, home, everything. If he did not have cash for something, he didn’t buy it. When he attempted to get a mobile phone from AT&T (where he had a phone account for decadess) they turned him down for absence of credit…such is our world today.

Rich Martin is a broker/associate with Better Homes and Garden Realty, in Houston Heights. His specialty are the 90-100 years old Houston Heights homes and 1 in surrounding 1940′s areas like Garden Oaks, Oak Forest and Timbergrove. He sells old homes and new construction that keeps the feel of the existing neighborhood. He has got a blog/website covering these old Houston neighborhoods.