Credit Scores #2

What do they (the credit bureaus that give you the score) look for?  They basically want to see that you use credit and use it wisely, that you are able and willing to pay back all debts owed by you. 

The obvious:  Do you pay your obigations on time?

The not so obvious:  Do you have a lot of  (or no) outstanding credit?  You should have at least one major credit card (MC,VISA, AMEX) and at least 1 other creditor that reports to the credit bureaus.  Your credit card balances should be less than 40% of your limit.  For instance if you have a $1000 credit limit, you shouldn’t have more than $400 on it card for maximum credit ratings.  If you have a number of credit cards then spread your debt out.  Using the department store cards can cause a bit of a problem.  Ususally people who use themhave a number of them, with $600 balances, but their Limits are only $1000. 

More to come in Credit #3

Mortgage Rates thru March

Rate Alert…

The lowest rates of 2009 were driven down to their attractive levels because of the Fed’s Mortgage Backed Securities (MBS) purchase program. Home loan rates have an inverse relationship with the value of MBS. When these securities trade higher on the market, rates move lower and vice-versa. So when the Fed originally agreed to be a big buyer, it helped provide a market for MBS, which helped keep prices high and, as a result, helped push home loan rates low.

And while the Fed continues that program through the end of March 2010, the reality is that the Fed‘s “extension” was really more of a rationing intended to prevent home loan rates from spiking as the program is phased out. It’s sort of like weaning the market off of its life-saving treatment instead of forcing it to go cold turkey.

Already, some in the media have mistakenly reported the extension of the program through March as good news, telling consumers that rates will continue to decline, and remain low into the spring. This gives a false sense of security that homebuyers and refinancers simply cannot afford.