Borrowers are belting the blues with higher credit minimums!
Wells Fargo recently tightened credit restrictions on its non-conforming loans – loans of more than 417K. Effective April 25, the financial services company now requires borrowers of non-conforming loans to have a minimum credit score of 700. Additionally, in March Fannie Mae and Freddie Mac, the government-chartered mortgage buyers increased interest rates for borrowers with credit scores below 700 – formerly higher rates were triggered by a 680 score.To bring things into even more perspective – prior to the latter part of last year, 620 was the minimum demarcation line required to garner respectable mortgage rates and terms. This line has since then been elevated to 680. And, now it seems that – lenders petrified and frustrated by the ongoing sub-prime mortgage crisis are sifting through loan portfolios with a fine tooth comb. They’re cautious and guarded with even their most credit-eligible customers. This resurgence of stricter underwriting standards have left borrowers with fewer financing options as lenders now require higher credit scores for loan approvals. How does this “borrowers barred” climate affect your credit worthiness? Clearly, it is even more crucial that you have an impeccable credit score. There is no real problem lending to people with great credit scores. The credit crunch mostly affects the lower end of acceptable credit. In my book “7 Steps to a 720 Credit Score” I encourage behavior alteration to rebuild, strengthen and protect your credit for a lifetime – no matter your credit level or current market conditions.You can start the process by becoming proactive about your credit health. From ensuring that the information on your credit report is accurate, maintaining low credit card balances, reviewing your credit card and bank statements regularly, avoiding late payments to checking your credit history with all three bureaus frequently – Your own best advocate is you! Pessimistic bankers, mortgage companies and other lenders faced with a bitter forecast are squeezing borrowers out of the American Dream.The writing on the wall couldn’t be clearer – “Think twice before you come to us for a loan!” To avoid trouble lenders are avoiding all risk. Fortunately, borrowers with a great credit score have less to worry about than those who don’t. And, even if you don’t have the credit score you need at this moment, there’s hope. By changing your credit mindset and cultivating the habits required to make the leap to a 720 plus credit score – you won’t have to worry about meeting your lenders’ minimum.
