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Wednesday, July 18, 2007

Hold that Mail!

Make It Easier with the Internet

Now you can notify the Post Office to hold your mail in two minutes flat without even leaving your house. Just hit this link, and you can quickly fill out the form online: USPS Mail Hold. If your area isn't served online, simply call 1-800-ASK-USPS (1-800-275-8777) and a representative can assist you. Then, have the time of your life...without worrying about your mail while you're gone!


Tip courtesy of Rob McElroy, Suntrust Mortgage

Credit Scoring Change soon to take effect!

Edward Jamison, one of the nation's leading authorities on credit and credit repair, authors this week's article on a pending change in credit scoring. For more information on Edward and his services, visit http://www.jamisonlawgroup.com/.

Fair Isaac's Pending Credit Scoring Change Will Affect MILLIONS
I have been forecasting for quite some time that Fair Isaac would eliminate the loophole that allows people to quickly increase their credit score by being added as an authorized user on someone else's established credit card...and sure enough, the time has come.
Marketers Made Loophole Too Prominent to Ignore
For the most part, this loophole has stayed under the radar until recently when a few companies came out of the woodwork with a marketable service that catered to consumers who will benefit from this practice. These companies recruit people from all over the country who have older credit cards with low debt ratios and offer them $100-$300 for each person they add to their credit card as an authorized user. Then, they market to consumers with limited credit histories and/or high revolving debt ratios and offer to have them added as an authorized user on a seasoned trade line for around $1500 per credit card and pocket the difference. As this practice became more popular, it wasn't long before the over exposure of this loophole shed light on the flaws of Fair Isaac's software.
New Software Will Eliminate the Loophole
Under pressure from lenders, Fair Isaac made the decision to invest the money into correcting this loophole. The correction is fairly simple: When Fair Isaac takes that snapshot of somebody's credit file, they are going to look at one extra field that they previously had not looked at when generating the score. That field is the one that says who is responsible for that account.
If the scoring software sees that the person is the primary on the account, then it will score the report just like it had done before and no change to the credit score will take place between the old and the new scoring model. This will also hold true if it says that the account is a joint account. But if they see that the responsibility on that account is as an authorized user designation, they will completely ignore that entire account when calculating the credit score. It doesn't matter if the authorized user was added five years ago or yesterday; they will instantly lose the benefits created, if any, from that account being shown on their credit report.
Going Forward
Due to the fact that the scoring model is changing in a few months coupled with the fact that some lenders are even denying applications in some instances if an authorized user account is present, I would advise that people refrain from getting added as an authorized user immediately. The benefit will soon be gone, and taking advantage of that benefit before it leaves may leave a person at risk for having a loan denied by some lenders.
To learn more about credit - and how you can make sure that your own credit report is as good as possible - just contact the lender who sent you this newsletter, for more information and ideas.

Monday, July 09, 2007

Market Rates

WHILE INDEPENDENCE DAY SIZZLED, BONDS AND HOME LOAN RATES FIZZLED...Just like a bottle rocket that turns out to be a "dud" - Mortgage Bonds sputtered and crashed lower last week, causing home loan rates to rise about .125% across the board.

The move was sparked by a variety of factors, including the Bank of England (like our Fed) announcing a hike in their benchmark interest rate to 5.75%, their highest rate in six years and .50% above our own Fed Funds Rate of 5.25%. Remember, our own US Bonds compete globally for investment dollars seeking the highest rate of return, so higher rates being offered in other countries can pull money out of our Bond market. And just like a slowing demand for any product would cause prices to decline - this caused Bond prices to move lower and home loan rates to rise.

Then the Jobs Report arrived with a bang, showing that the labor market is still hot - 132,000 new jobs were created in June, with another 75,000 jobs added to prior month's reports, and the Unemployment Rate remained at a lean 4.5%. This healthy report gives the Fed continued reason to be concerned over "wage-based inflation". This means that as employees are paid more - they have more money to spend on goods and services, which can drive prices of consumer products higher with the added demand. Additionally - employers that have to continually pay higher wages to their employees may have to raise the prices of their own goods and services, just to help retain their profit margins. This very real inflationary concern will keep the idea of a Fed rate cut on the back burner for now - and these concerns also drove inflation-hating Bonds lower still, again causing home loan rates to rise.

Rob McElroy, SunTrust Mortgage
www.suntrustmortgage.com/mcelroy