16 • JULY 2017 • UPBEAT TIMES, INC.


‘Summer Guide & Whats UP! TM


TM


THE MORTGAGE COACH


SANTA ROSA, CA. ~ Faster than High-speed Internet! More powerful than Super Man! Our credit scores leap into our lives and cast hurdles into our paths. Each month, our personal informa- tion is, compiled, digitalized, and transformed into a three-digit num- ber. Tis number is called our “FICO Score”, and weighs heavily on our ability to obtain the lowest inter- est rate, land the best employ- ment, or even rent that perfect house. Passed by Congress in 1971, the Fair Credit Reporting Act (FCRA) and all its amend- ments, have been instrumental in protecting us from abuses of


by Barry O'Meara • barryo@stearns.com Got Credit?


the Credit Reporting Agencies (CRA). Tese agencies consist of three bureaus: Equifax, Ex- perian, and Transunion. Te information the CRA com- piles uses the Fair Isaac Corporation (FICO) scoring model. Tese bu- reaus then gener- ate a number be- tween 300 and 850. Tis number will be used to predict whether you’re


a


good credit risk. Te housing


market is as high


as a heat wave and finding af- fordable housing seems to be slipping away. Tis rising trend has once again hit an- other high mark. According to Te Press Democrat’s monthly housing report, compiled by


Pacific Union International Se- nior Vice President Rick Laws, the median single-family home price reached $625,000 in May 2017. Tis is a 7% increase from May 2016, when it was $583,000. Tis rise in value is not caused by unqualified buyers like the last bubble, but by lack of inventory and over- flow demand from the higher priced Bay Area. Today loans are fully documented and bor- rowers must document the “ability-to-repay” and “know before you owe”. Because of how loans are


priced, a credit score can make a huge difference in a mortgage payment. A low credit score could make prospective buyers ineligible for any loan or could make the payment too high to qualify.


Loans are priced on


a “Loan Level Pricing Adjust- ment” matrix, which compares loan-to-value against credit score.


So, a low-down pay-


ment with a low credit score will result in a higher interest rate. Terefore, FHA becomes the best alternative when the credit score is low. Unless something is be-


ing reported in error, the only control people have for keep- ing credit scores up is how they use credit. Making pay- ments on-time, never maxing out a credit limit, and never using more than 1/3rd of the credit limit, will ensure a bet- ter score. Tree credit cards with a $1,000 limit and each with a balance of $333 would have a higher credit score than one card with $1000 limit and a $900 balance. Credit reports are just reading credit usage. So, by keeping balances low and payments on time will add points to a credit score. Paying off a collection will


202 West 7th St. Santa Rosa, CA 95401 707-545-7528


16 • JULY 2017 • UPBEAT TIMES, INC.


oſten lower a credit score. Un- less negotiating for removal of the collection all together, pay- ing off the collection turns that


... continued on page 19 “That’s the secret to life... replace one worry with another....” ~ Charles M. Schulz


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