It should be one of the first factors you look at when you begin planning to buy a Carlsbad house, because unless you are in the rare position of being able to make an all-cash purchase, sooner or later your credit score will become a prominent factor. There was an important get-together in Washington this month which held some information that could ultimately become pretty important for both Carlsbad home buyers and sellers.
The meeting was held at the National Association of Realtors headquarters, with participants that included HUD Secretary Julian Castro, credit score industry representatives from FICO and Vantage Score, and other experts in research, government, and real estate. This might seem to be the kind of gathering (“Symposium,” in this case) that is usually more productive of eyes glazing over than much else, but for Carlsbad home buyers and sellers, this one was different.
The subject was “Credit Access”—how companies determine the credit scores that guide lenders’ decisions on who will and won’t be offered home loans. The consensus was (and is) that current credit score formulas could stand some improvement. Secretary Castro’s Keynote set the table when he said that there is a recognized need to find new ways to construct credit scores that are more sensitive to “getting at” the bottom line responsibility potential borrowers have shown in their lives; credit scores that will predict how they will pay down their mortgages. “There’s been a disconnect there,” he said.
Since this is the single reason that credit scores exist at all, it seems like quite a statement to make, particularly with the credit scoring companies right there in the room.
FICO and Vantage Score have already been fine-tuning some of their methods. Carlsbad buyers may have already have seen their area credit scores improving when non-recurring problems (like tardy medical bill payments) were de-emphasized. But on a wider scale, there was considerable discussion about the need to adapt to lifestyle shifts that are taking place. The way Americans live their lives—particularly the way they use technology—has changed, and will continue changing. Blanket shifts in lifestyles make some behaviors different predictive value than they used to have: for instance, many millennial and minority consumers “don’t use credit in the same way households did in the past.”
It’s in everyone’s interest that credit ratings be accurate predictors of repayment patterns. With interest rates continuing to be at bargain basement levels, it couldn’t be more important, because it also continues to be a fantastic time to be in Carlsbad’s real estate market—and to give me a call!
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