“Report Explains Why Credit Standards were Lowered”

I love reading these kind of reports. The truth is that credit standards have not been lowered, the credit score models have been lowered. Since the allowable scores that lender will allow and the standard have basically not changed, its still not any easier to get a loan approved.

There is only one major reason that credit score requirements have been lowered, there is less mortgage volume and this was the attempt to crank up the number of mortgages that might come in the door. There is no lack of spin.

There is a benefit to lower scores for folks that deserve a mortgage, more folks have an opportunity to own a home. Thus was the case for Ginger. In 2008 she had lost her job and looked for work for almost a year, before getting rehired by her former employer. During this process, she lost her home and her credit really took a nosedive. Unfortunately she was never coached of steps to improve credit after this period of her life.

I worked with her for a number of months to clean up some old stuff that was reporting to the credit bureaus each month. Even though she had re-establish some new credit, what was reporting as negative, kept her scores under 600, but I easily got her a mortgage on a home. Her mortgage payment was under $1200, she was paying $1250 for rent, so owning was a wonderful opportunity.