Pg 22 • March 2020 • UPBEAT TIMES, INC.

Upbeat’s Spring Guide#1 The Mortgage Coach

Sonoma County, CA. ~ I love Spring, but not in the middle of winter. The release of Pliny the Younger was graced with sunshine instead of showers. In- stead of pon- chos, the beer pilgrims needed sun- screen. As days

stretch lon- ger, and in- terest rates hold steady, home buying season is in high gear. If your desire to make 2020 the year you buy your first home, or move up to your next home, be prepared and know where you stand. Does your credit score

stand up to scrutiny? Changes in credit scor- ing models could impact your ultimate score. Faster than Wi-Fi! More powerful than a “Su- per Pac”! Our credit scores leap into our lives, and cast hur- dles in our path. Each month, our personal in- formation is compiled, digitalized,

and transformed into a three-digit number. This number is called a “FICO Score”, and weighs heavily on our ability to obtain the lowest inter- est rate possible, land

the best employment, or rent the perfect house. Passed by Congress in 1971, the Fair Credit Re- porting Act (FCRA) and all its amendments, have been instrumental in pro- tecting us from abuses of the Credit Reporting Agencies (CRA). These agencies consist of three bureaus: Equifax, Ex- perian, and Transunion. The information the CRA compiles uses the Fair Isaac Corporation (FICO) scoring model. These bureaus then generate a number between 300 and 850. This number will be used to


whether you are a good credit risk. What is your FICO?

This is a moving number. However, with caution

Relax in Comfort.

New Trends in Credit!

by Barry O'Meara ~

we can keep our scores high. Having your credit checked too often, or car- rying too much debt, all affects your final score. The model developed by Fair Isaac breaks the scoring into five catego- ries: payment history; amount owed; length of history; new credit; and types of credit. Sixty-five percent of the scoring is weighed on payment his- tory and how much we owe. So, with that knowl- edge, it makes sense if you pay your bills on time and don’t max out your credit limits, your scores should be high. The rule of thumb is to keep your credit

card balance to

1/3 of your limit, never be late on a payment, and only apply for credit if you need it. If you follow these simple rules, you should be able to keep your credit score above 700.

The new credit mod- eling will include trends of how you manage your debt. They have added “trending” to the scoring model. Trending is cov- ering a 24-month pay- ment pattern and debt balance. There are also plans on some models to include banking infor- mation, monitoring your banking habits. Do you keep a high balance in your bank account, or are you relying on overdrafts

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100 Fourth Street • Santa Rosa, CA (707) 575-3198 Pg 22 • March 2020 • UPBEAT TIMES, INC.

110 Fourth Street • Santa Rosa, CA (707) 575-8287

to keep you going? When lenders price-

out a loan for a home mortgage, they use “risk-base-pricing” mod- els to determine your final interest rate. This matrix is referred to as a Loan-Level-Pricing-Ad- justment (LLPA). The matrix is set up with col- umns and rows broken into credit score ranges. The other columns are broken into loan-to- value ranges. Low credit scores, higher loan-to- value ranges, result in higher pricing adjust- ments. These pricing adjustments cost dollars – in origination fees, or a higher interest rate. Ei- ther way, the lower the credit score, the more it is going to cost you. Being able to man-

age your credit well, and understanding how your credit is viewed, can make a huge difference in being able to lever- age debts. When you leverage your debts prop- erly, you can take advan- tage of great deals and build a foundation for your future. As spring approaches,

let’s hope for rain. Pliny the Younger pilgrims didn’t need rain ponchos, as the weather was as dry as summer, but we perhaps if we all wash our cars, it will bring the rains!

Life is like sailing. You can use any wind to go

in any direction. Robert Brault

To live is so startling it leaves little time for anything else. ~ Emily Dickinson

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