Subprime behavior catches attention of Fair Isaac

In order to better predict the behavior of subprime borrowers, Fair Isaac announced on Thursday that they will change the way they tabulate its FICO credit score.

Fair Isaac will launch an upgraded version of the system in September which aims to bolster the accuracy of scores by 5 to 15 percent.

The FICO scoring system is used by the three major U.S. credit reporting agencies; Fair Isaac said it periodically refreshes its formula.

Credit scores have taken on new importance lately, as a rise in subprime mortgage delinquencies and foreclosures makes lenders want to know which borrowers are the best risks..
The new FICO score will use the same 300 to 850 scoring range, but will be able to better assess new accounts and borrowers who have little or no credit histories, such as young people.

Global Competition for your paycheck

Is the global competition for your paycheck a good or bad thing? Do you feel that this competition will work to drive up wages, or bring them down?

Whether or not it is a good or bad thing, the global competition for your paycheck is real.

How are we positioning ourselves to be marketable and competitive in the global workforce?

Visit Vince Cordic's Internet Marketing Tactics and read a post and view the slide show about globalization in the 21st century; truly an eye opener.

Should I let the bank repo the car?

WYHY writes...

"Will be filing for divorce and will have to pay child support. Cannot afford the vehicle payment, I was going to turn the vehicle in, instead of having them repo it. Wouldn't it be better to turn it in than for them to repo it? There is more owed than what the vehicle is worth, do lien holders work with you on decreasing the total amt owed? Obviously if I could afford to keep it I would, so if they have the option of suing and I don't have anything, how would they benefit? I'm wanting and trying to make/do the best thing and just need to know what to say to the lien holder when I talk to them."

Sorry to read this, WYHY, but there is hope!

I recently had a situation with someone that was in your exact same position. They had a car payment that they couldn't afford anymore because of a divorce and having to pay for child support.

This person called me and asked what he should do. I told him that he should immediately contact the lender to let them know about his situation. I can't think of any lender that would be upset to hear from a borrower who has a problem and is looking for help.

Anyway, this is what happened. He too was upside down by a few thousand dollars. The creditor gave him the option of turning the car in on a voluntary repossession, OR gave him three months to sell the car for as much as he could get for it. During the three months they offered to reduce his payment.

He took them up on the 'let's try to sell it' offer, and did sell it a few weeks later for a few thousand dollars less than what he owed.

The creditor then agreed to refinance the remaining balance for an affordable payment, and released their lien on the car.

In the end, the debtor paid of the loan balance and preserved his credit rating. The creditor was paid in full, did not have to repossess or sue for a deficiency. Everybody goes home happy!

Teaching a son about borrowing

Just read this post about "Discussing money and credit with you children" by Marc Chase over at My Credit Group.

Marc writes about a dad that was paying his 15 year old son a $20 weekly allowance. This dad thought that he would teach his son about borrowing money and paying interest and late fees.

I think dad was on to something. At the very least, he was taking steps to ensure that his son learned something about using money.

In a previous post here on Money and Credit, I talked a bit about our responsibility to help our kids reach their finacial goals. It was nice to read about this dad that was teaching his kid about being responsible with borrowed money.

Teens overly optimistic about earning potential? Huh?

According to an annual survey recently released by Charles Schwab & Co. Inc. , our teens may be overly optimistic about there future income.

A recent article in ACA International says;

"Highly motivated by money, eight in 10 teens ages 13–18 agree that “it’s important to me to have a lot of money in my life,” and nearly three–quarters (73 percent) believe they’ll be earning “plenty of money” when they’re out on their own. In fact, American teens confidently predict a future in which, based on the career that interests them most, they will be earning an average annual salary of $145,500 (boys expect $173,000 vs. girls, $114,200). The reality: Only five percent of the U.S. population currently earns a six–figure income, and the average national wage stands at approximately $40,000."

We as parents and leaders, should do our level best to help our kids reach their financial goals. This article in ACA International and survey by Charles Schwab & Co. Inc. suggests that our kids might have high expectations of themselves. Well, what's wrong with that? The higher the expectation, the more likely it will happen.

Let's nurish our kids expectations of themselves! How dare we suggest to them that their dreams aren't possible or likely? Let them go for it! Let's get them the financial education that they need to make their income dreams and financial goals a reality! Talk to your schools, banks and credit unions. Get the professionals in front of your kids to help them learn about money and credit. Have your kids visit this blog on a regular basis! Click here for another good site for your kids to learn about money and credit.

We owe it to our kids. Don't be one of the nay sayers. Encourage your children to achieve their hopes and dreams!

Be sure to visit FIRE Finance for information about financial freedom!

Ameriquest Loan Officer Tells All

Unbelievable, simply outrageous! Does anyone still wonder how could the subprime mortgage industry go up in smoke? Listen to this from NPR this morning.

I still believe that subprime mortgages are not a bad thing. Many folks would not have had an opportunity at homeownership without them. Moreover, subprime mortgages and subprime loans have been the stairway to good credit for hundreds of thousands of people!

The old saying that it only takes one bad apple to spoil the bunch is very true. Listen to what one loan officer has to say about what was expected of them.... unbelievable!

I guess the lesson to be learned here is that the buyer must always beware! Shop around, learn before you leap!

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Are you tired of going to your mailbox and finding all kinds of pre-approved credit card offers?

Would you like to make the credit card companies stop sending you all of this garbage?

Did you know that there is a chance that you identity could be stolen if one of these pre-approved credit card offers were to get in the wrong hands?

Here's how you stop the credit card companies from sending you these offers.

Ammendments to the FCRA enable you to get one free credit report annually, and to opt out of pre-screened credit card offers. To opt out of pre-screened offers, call 1-888-567-8688 or visit www.optoutprescreen.com .