Credit Scoring System May Change

In evident response to consumer complaints, the three main credit reporting agencies have decided to change the way your credit score is calculated and scored. In the past you could have different scores with all three companies (lenders would use the middle score). This system has been a thorn in the side of consumers for years and is largely hidden from view, which is its main problem.

No word yet on when this new system will be implemented (it may already be in place) but here are some details:

"The three major consumer credit reporting agencies recently unveiled a new way of calculating credit scores, introducing A through F letter grades designed to give consumers a better idea of where they stand.

With the new system, a single methodology will be used to create the scores for all three credit bureaus. Credit scores traditionally have been three- digit numbers that lenders used to evaluate the creditworthiness of borrowers. Current scores range from 300 to 850.

The new credit scores will be issued on a scale ranging from 501 to 990, with higher scores being better. To help consumers better understand the scores, they are also assigning them letter grades: A score between 901 and 990 is an A, 801 to 900 is a B, 701 to 800 is a C, 601 to 700 is a D, and 501 to 600 is an F."

Recent information indicates that this change is still a ways off. I'll pass along more information as it becomes available.

Richard

Phoenix Market Update 5-1-2006

We still have plenty of real estate headlines - both good and bad sounding.

My recent personal favorite was "Phoenix loses home-building title but performs well". So, we lost our top billing nationally but overall things are back to what they were before last year's gold rush.

There are buyers out there and mortgage rates, while rising, are not yet too high. Inventory of resale homes on the market is up and is being described as "higher than ever". While true, that fact itself does not portend disaster.

Considering the number of people moving to the area each year and the number of new homes built over a 12 month period, there should be more homes on the market each year. Something would be wrong if there weren't more homes available.

So, overall, we are in about the same situation we were two years ago with a small but steady increase in the average home's value. Don't buy into comparisons of the market to a year ago; 2005 was a special case.

By the way, I still have California investors making offers on the listings I have. They are, I think, here to stay.