Credit Scoring Expert speaks candidly about his personal growth and asks respected writers to share content to help others improve their life.

Yesterday I got a call a money manager from Canada. He said, “I’m so excited that the market’s turning! Inventory of real estate is coming down and banks are lending more! It’s going to be great!” I hate to be the downer here… but there is one thing that everyone is missing: lending guidelines are tougher than they have been for over a decade AND they continue to get tougher. If the guidelines don’t loosen, then there’s no way we’re going to have a recovery like everyone thinks is coming. Last week a lady called me for a loan for $300,000 loan. Her property is worth $2M. That’s a 15% loan to value, meaning there is only a loan on 15% of her home. She’s been in the property for the last 12 years, has $75,000 in the bank, has never been late on her payments, and her credit score is over 720. Per Fannie Mae/ Freddie Mac’s current lending guidelines, she can’t qualify for a $300,000 loan. Why? Because her income goes up and down (she’s an actress). Do you see the problem here? When someone who has lived in a property for 12 years, has great credit, never missed a payment, has $75,000 in the bank (equivalent of 3.9 years of payment), and they can’t get a loan, I think our lending guidelines need to soften before we’re going to see a recovery.