We have recently
been hearing about new credit scores, non-traditional credit
supplements, long term zero percent credit card offers, celebrity
debit cards, and loosened qualifications for credit card approvals to
consumers with lower scores. Times are a changing but what does it
all mean?
Since 2011 ended
it seems lenders and creditors may be stepping over a threshold into
extending approvals on credit cards and loans with more lenient
qualifications. This month there are more than a few credit cards offering
21 month term zero percent interest rates with NO transfer fee for
top tiered credit score applicants. In the past few years the zero
percent offers were for six months and they usually had a 3-5%
transfer fee meaning they were never true zero percent cards.
There is also much talk of new credit supplements full of
non-traditional credit information that may add points on scores for
those with limited history. These supplements will give some
consumers more opportunity while causing score reductions for those
with delinquencies on rent payments, child support, or other negative
non-traditional data. It has even been mentioned that property values
will be assessed on these supplements, which can weigh on approvals
for financing. For a fee, bankers and landlords will have the option
to use the added supplements when making lending decisions.
Many of today's credit card applications are adding more personal
questions such as what level of education the applicant has. So
either bankers and creditors are looking for extensive information on
applicants so they can approve more financing with less risk, or
credit score providers are seeking new ways to charge higher fee's to
lenders, or both. It is hard to gauge right now what the outcome of
these new behaviors will be and if it will benefit consumers,
bankers, and the housing market.
When the economy
went into a financial crisis, defaults increased dramatically causing
banks to pull back the reins and create tighter restrictions for
qualifications. As soon as this occurred scores started to become
more important to the approval process. As time has gone on we have
seen the credit scoring industry and atmosphere develop into a frenzy
of competition, new score production, tons of credit tools and
offers, and thousands of fly by night companies that promise to
increase credit scores but don't deliver results.
For consumers and professionals it has been a massive overload of
credit information, including misinformation leading to a lot of
confusion and panic. This is one of the reasons I spend countless
hours studying credit and deciphering what data is worthy of
delivering to you.
We now have the Vantage score, Fico Scores, Plus Scores, Credit Karma
Scores, Equifax Scores, and more. Although there are some great
credit repair companies available to help there are more that will
allow consumers to sign up and pay for services online without ever
speaking to the consumer or reviewing their current credit and
financial situation.
Credit monitoring products are also available to consumers (for
protection) by credit card companies who in many cases are the ones
that have jeopardized consumers private data in the first
place. Should consumers have monitoring products they can use
daily and pay for monthly, buy their credit every quarter on their
own, or pull their free annualcreditreport.com reports once a year?
How do they start to prepare their credit before buying,
leasing, or refinancing a property and who can they look to for
accurate guidance?
Lots to think
about and if I were an average consumer or even a sophisticated
banker I might just get in my car and take a long ride after
pondering the first part of this article!
Back to reality
and the question at hand, how does one know which way to turn
and what to choose? Each consumer and situation is unique with
varying individual factors, from different credit scores, income,
assets, goals, desires, to the needs of the consumer. In today's
economy it is of great importance to understand that the best choice
for one may be the worst choice for another. Having the right
professionals around to guide a consumer to make the best decision
could mean a successful outcome, huge savings, or both. With social
media everywhere giving us instant access to potential and existing
clients we all have a great opportunity to show how valuable we are.
Providing the best information, sources, and professional help can
mean more closings, clients, and referral sources.
Due to all the
requests for information from consumers, bankers, realtors,
reporters, and other professionals, I am creating a website that has
nothing to do with credit repair but is strictly full of cutting edge
credit information and tools. Bankers will be able to gain insight
into credit and score news that relates to lending and be able to
refer clients to the site to learn how to prepare their credit before
the loan application process. The site will also explain how scores
will be affected after a mortgage approval, and greater detail will
be given into the varied credit scores that exist online.
There will be a format for questions and answers and consumers can
get free credit reviews and feedback as well. Bankers will be
able to find information to share on their blogs, as well as on
twitter and facebook. This site will be strictly for credit education
and insight and we would love your feedback about anything else you
feel we should add to the site that might benefit you and your
clients.
We will keep you
posted when the site is completed.
Making sure
credit is analyzed with future goals in mind is a MUST before taking
an action that can foil those plans and limit a consumers options for
a better quality financial life.
Feel free to call us if you have any credit questions or need
feedback on a credit report.
"Great credit brings great
opportunity!!"
Copyright 2012
