Take Control of Your Credit Score

Parents aren't so bright when it comes to what behaviors will impact their credit scores and that could brush off on their kids.

In March, ING Direct bank commissioned Harris Interactive to conduct an online survey of 1,042 parents of children age 17 years and younger.

• The survey discovered more than half, 56 percent, of those surveyed thought bouncing a check or paying a fee for having non-sufficient funds in their bank account would reduce their credit scores.

Wrong.

Credit reports typically don't include information about checking and debit accounts, nor non-sufficient fund issues unless they somehow impact an attached credit account.

• Also one in five (21 percent) thought checking their credit scores would hurt credit scores. Nearly as many (18 percent) thought accessing their credit report, would hurt their credit scores.

Wrong and wrong.

Obtaining your credit report and credit score has no bearing on your credit standing.

In fact, you should check your credit reports regularly. Every year, federal regulations allow you three free credit reports (ONLY through AnnualCreditReport.com), one each from the three credit reporting agencies, Equifax, Experian and TransUnion.

If you visit some other sound-alike, come-on web site, instead of AnnualCreditReport.com, expect to pay for credit services you may not need in exchange for that so-called "free" report.

From AnnualCreditReport.com, get the three free reports all at once if you haven't seen them for years. Otherwise get one from a different company every four months to regularly monitor your credit report for errors, identity theft, black marks you may need to work on and other issues.

For your credit score it will cost you a nominal fee (it's worth it) paid to each of the three credit reporting agencies.

A credit score -- virtually always examined by lenders when you apply for a mortgage, credit card, car loan, other credit, even homeowners insurance and other financial accounts -- is a numerical rendition of your creditworthiness.

Scores range from about 300 to about 850. The higher the number the more likely you are to get credit and the more likely you are to get cheap credit. Your score should be at 760 or above to land the best interest rate, according to FICO, a leading credit scoring system provider.

Debunking the myths

To help debunk credit score myths, misunderstandings, misdirection and to stop financial behaviors that could be passed onto future generations, ING Direct and Experian developed five tips to help parents separate fact from fiction.

• Practice what you preach. Simple financial behaviors such as paying your bills on time will keep your credit in good standing and will allow you to obtain better interest rates on big asset purchases like a house or car. Lead by example.

• Start early. When you kids start to ask you to buy things for them, it's time for the "money talk." Later, introduce more complex credit topics with stern statements like "credit is not free money." Talk about interest rates, paying on time, paying off balances and saving money.

Make learning fun with interactive web sites like Planet Orange; $avingsman's Choose To Save; Smart About Money; Credit When Credit Is Due; Fool Proof Me and MyMoney

• Make credit a family affair. Let children in on household financial discussions that reveal the true cost of necessities. Sit them at the table during budget and bill paying sessions. Explain the fallout from making poor financial decisions.

• Set family financial goals. Teach children how money doesn't grow on trees. Show them how to save for things they desire rather than accessing credit to spend money they do not have. It's a way to encourage your children to set financial goals and work towards achieving them. Children savor things more when they put in the time and effort to purchase items with their hard earned cash.

• Explain the difference. Talk to children about the differences between needs versus wants, especially at times when they want you to give into impulse buying. During grocery store visits, show kids the difference in prices between name brands and generic brands as a way to expand on this lesson.

JOIN US Next Tuesday!

PLEASE JOIN US!!
REX Club is holding our next meeting on July 20,2010
Where: Petroleum Club. 3301 C Street Ste. 102
Time: 5:45 pm to 8:00 pm
Please RSVP Kecross@gci.net or Adam@firstrateak.com

The Housing Market Gets a Vote of Confidence

The Housing Market Gets a Vote of Confidence....from Mortgage Insurers

After months of Federal tax credits and over a trillion dollars of mortgage-backed securities purchases by the Fed, encouraging signs of increased liquidity from entities outside of the Federal government are starting to become more readily available via the mortgage insurance market.

Over the past two years, delinquencies, which in many cases lead to eventual foreclosure, had plagued so many of these private insurers that they were forced to shut their doors. Now, a resurgence of capital is being infused into many of the survivors, leading many in the market to believe that there is a renewed sense of confidence in the mortgage market, particularly with regards to residential mortgages originated in excess of the 80% LTV threshold that these insurers support. Over $2 billion of investor dollars have been injected into various mortgage insurers, many of them start-up firms, and now they stand ready to underwrite and insure.

Case in point, MGIC, one of the last giants standing from the market collapse, raised over $1 billion in fresh capital in the last 60 days; a combination of stock and debt. The PMI Group raised over $700 million dollars in new funding as well; also a combination of debt and equity. Mortgage Assurance Corp, a start-up from Wisconsin, just got its licensing from its state regulator. In addition, Radian Corp, another start-up mortgage insurer, raised $500 million for its operations from a variety of investors which included a private equity firm (Pine Brook Partners), JP Morgan Chase, and investment banking powerhouse Goldman Sachs. As of today they are very close to being licensed in all of the 50 states. Moreover, the stocks for both MGIC and PMI Group are up over the last two months, which in itself is another vote of confidence in the mortgage market. Given that the FHA is now raising its MI premiums and tightening its underwriting criteria (due its record losses and current liquidity issues), a resurrection in the involvement of private mortgage insurers is just what our industry needs to continue our recovery.

The private mortgage insurance market looks to be making a comeback. Given that the FHA, Fannie Mae, and Freddie Mac are all hemorrhaging and incurring massive losses, it can't come at a moment too soon; particularly since the Fed is no longer purchasing mortgage-backed securities to artificially keep rates low. As the private market continues to inject fresh capital into the various entities that facilitate the life blood of the mortgage industry, the financing marketplace should continue its steady pace to a full recovery. The outside investor confidence in the mortgage industry will do wonders to lift up our industry as the Federal government pulls back and winds down its programs. One can only hope that all of this fresh capital doesn't lead to another round of over aggressive lending........remember 100% no-doc?