Mortgage Updates

It seems that there is a pent up demand for housing that keeps waiting for the "best" buy.  When is that time?  If you are one of those waiting to jump in when you sense that the price is right, you need to know that the credit crunch my come to your door.  What do I mean?  You say, "I pay my bills on time.  I don't have excessive debt and my job is sound.

Surprise, that may be good today but as credit card companies pare their risk or change their over all business plan - your credit scores can be impacted.  Yes, even if you are NEVER late on a payment.  How?

As credit companies restrict credit they are lowering credit lines available to consumers.  That means if your available borrowing power on an American Express revolving account is $15,000 and you owe $5,000, credit scoring will elevate your scores because you have unused credit.  Now when American Express cuts your credit line --to your outstanding balance-for no other reason than that their model has changed.  Your credit scoring will be reversed.  Instead of a positive bump, a negative impact occurs.  This is due to your being at the limit of your available credit on that card.

This means that your 720 score could drop to 700.  When your other cards do their updating and see that your score has dropped and that you are maxed out on this card, they in turn will cut available credit which brings another reduction in the credit scoring model...

Credit scoring may be the next area in a downward spiraling broohaw for consumers.  This is what you need to guard against, because we all know that interest rates and favorable terms are tied to an applicants credit score.

As always, your comments are welcome.