Credit score fiasco!!!!!

By
Real Estate Agent with Keller Williams Atlanta Metro East 230739

FHA is tightening their lending requirements and very shortly raising down payments from 3.5 to 5 percent. Minimum FICO scores have gone from 580-620 and buyers are feeling the crunch. Credit card companies are lowering credit limits thus creating higher debt to limit ratios which in turn lowers FICO scores. Seems like a huge issue that interest rates and available balances can be controlled by credit score while a customer has an active account, and even if they pay on time. For example, a client with a 5k line of credit with a balance of 25oo is at a 50% debt ratio, if the company lowers their limit to 3000, their ration shoots up to 83% which will negatively impact a FICO, thus hurting the consumer when trying to apply for a mortgage or other credit. There is no incentive for credit companies to help you stay credit worthy, it is more profitable to hurt your scores.

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Topic:
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Location:
Georgia
Groups:
Realtors®
Tags:
fha
credit score
mortgage
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Rainer
129,054
Ron Brown NMLS #270845
NMLS ID: 40831 - Federal Way, WA

Joseph,

I have not heard anything about the increase of down payment requirement.  Could you let me know where this information is coming from?

Oct 25, 2009 02:58 AM #1
Rainer
27,059
Mike Wald
Mike Wald, Scottsdale, AZ, mortgage consultant, 480-241-2632 - Scottsdale, AZ

Joseph, please check your facts. FHA is not raising the downpayment requirement. It was only a proposal.

Oct 25, 2009 03:01 AM #2
Ambassador
1,557,809
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

That's a problem for all of us with the credit card companies lowering their limits. I think the entire FICO system needs to be overhauled. The old matrix doesn't work anymore and good people can't get loans.

Oct 25, 2009 03:04 AM #3
Rainmaker
284,767
Gene Allen
Fathom Realty - Cary, NC
Realty Consultant for Cary Real Estate

But the FICO system works so well as a profit maker they don't want to improve it.

Oct 25, 2009 03:14 AM #4
Rainer
429,183
Michael Regan
The Regan Team Home Loan Group - Petaluma, CA
Home Loan Extraordinaire

There's been some talk about raising the down payment requirement but nothing has been set in stone.  I know NAR is really fighting that; as they should. 

Oct 25, 2009 03:15 AM #5
Anonymous
Joe Griffin

The passing of pending legislation HR3706 would accomplish down payment increase.  The question is, why wouldnt it pass?  The government will often times try to appease consumers and businesses simultaneously.  Is it conceivable that the tax credit will be extended, but the down payment requirements increase just to keep both sides happy?

Oct 25, 2009 03:44 AM #6
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Rainer
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Joseph Griffin MBA, CBB, CCB

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