Credit is a very important part of Americans day to day life. Some may even argue it has grown to be too much a part of our lives. Whatever your view is, it is important that you have the knowledge necessary to understand the credit system so that you may use that information to your advantage. Yes, there are certain practices that until laws are change the consumer is helpless but there is also information that can help you become more fiscally responsible and take control of your credit.

     First of all, Fair Isaac has updated their model calling it FICO 08. They were hoping to have the necessary updates made by spring 2008 so it should be fully integrated at this point. So below is what you need to know to master your credit score and make it work for you.

1- Scoring Range = 300 – 850
     * 780 – 850 = Low Risk
     * 740 – 780 = Medium-Low Risk
     * 690 – 740 = Medium Risk
     * 620 – 690 = Medium High Risk
     * 300 – 620 = High Risk or sub-prime ( sound familiar )

2 – Components used in determining your Credit Score
     * Payment History ( 35 % )
        I. Payment record of accounts on file, the more lenders with no late payments, the better your score.
      II.  Age ( length ) of positive credit history, obviously more is better.
     III.  Age ( length ) since the most recent negative item on file, the longer its been, the better your score.
    IV.  Delinquencies or defaults, this would be your 30 and 90 day late payments. Less of both is better. ! FICO 08 will not group all severe ( 90 day ) delinquencies together but give better scores to consumers that may have had a slip up and still maintain the majority of their debts in good standing. However multiple delinquent accounts will more severely lower a consumers score.
     V.  Public Records items such as tax liens or bankruptcies, none would be ideal.

    * Total amount of credit in use ( indebtedness )
      I.  Number of credit accounts, an excess of accounts can lower score, as well as too few. ! FICO 08 will give more points to consumers who maintain a variety of accounts ( credit cards, installment loans, etc ) citing it shows responsibility in handling different types of debt.
   II.  Balance of Installment loans, these are car loans and mortgages, the more that is paid of the better for your score as they see the consumer as being more responsible with managing debt.
  III.  Ratio of credit balance to total credit line, meaning the more accounts with close or maxed credit lines the greater negative impact on your credit. ! FICO 08 will deduct more points from consumers who maintain credit balances closer to their credit lines. The amount owed on all accounts combined is factored as well.
 IV.  Amount paid off on installment loans ( mortgage, car , etc. ) Paying down the principal on installment loans on time is seen as good management of debt by Fair Isaac.

  * Length of Credit History ( 15 % )
     I.  Age ( length / years ) of your credit file, all accounts, the longer the better.
   II.  Age ( length ) of each credit account
  III.  Time passed between us of credit lines.

  * Number of New Credit Lines and Inquiries ( 10  % )
    I. Number of new accounts with an emphasis on credit cards ( unsecured debt )
  II. What amount of time has passed since opening a new account.
 III.  Number of requests for new credit and the period of time those requests were made.
 IV.  Amount of time passed since requests were made by lenders against a consumers credit file.
  V.  Does the consumer have clean credit post timely payment issues.

 * Type Of Credit ( 10% )
    I.  Fair Isaac wants to see the consumer maintains a responsible mix of installment and revolving credit lines. However, much like their wanting a responsible number of credit lines, they do not specifically define the ideal “mix”. ! FICO 08 will give more points to consumers who maintain a variety of accounts ( credit cards, installment loans, etc ) citing it shows responsibility in handling different types of debt.

 * Other important factors to note on credit scoring
    I. Ordering your own credit report does not affect scoring and you should do this at least once a year to firstly protect yourself from identity fraud but also to ensure that the information in your file is correct.
  II.  Rate shopping or making multiple inquires in a short period of time will no longer greatly affect your score as Fair Isaac update their scoring model to allow for this during the recent housing boom.  Fair Isaac will consider all inquiries in a 30 day period as one and prior to the 30 day buffer any inquiries over a 14 day segment will be considered as a single inquiry. It is important to note that this only applies to auto and mortgage loans. Another other type of credit inquiry will be counted  However, opening multiple accounts in a short period of time could negatively impact your score.
 III. Pre-Approval offers, employer inquiries and account reviews by current lenders are not counted against you score.

   Now that the mystery of credit scoring is unveiled take this information and get yourself the post score possible. Pay down your debt, pay your debt on time, and do not constantly apply for every credit card offer that comes your way. And though closing accounts is a good way to protect yourself from credit card fraud be careful not to cancel your more mature credit lines. Lets see if gets to 850 first.

-= Matt

   Wanting to buy a house in a couple years I began looking into whether or not low down payment options are still available. The reason being is the money is harder to get, but the homes are still so expensive you need a substantial amount of cash to do the traditional 20%. This is my observation only , so please meet with a qualified broker or lender , but there seems to be some hope. My findings are as follows;

1 – You use to need a good credit score to get the lowest interest rate , now you may need it to qualify for a lower down payment as well. Also FICO is changing its scoring model which may help people who have had minor slips in payments gain a higher credit score.

2 – FHA still offers low down payment programs , as low as 3% , through participating lenders and down payment assistance grants as well, find more information at fha.com

3 – Good Wells Fargo tool that shows the possibility of qaulifying for a loan with as little as 10% down.  Click here Wells Fargo Loan Tool .

Bear Stearns once commended as one of the greatest Investment Firms on Wall Street will soon be absorbed by JPMorgan Chase. A price agreement has been reached and shares of Bear will be swapped for shares of JPMorgan. Shares of Bear Stearns traded for as high as $163 now trades for $10 a share. Only $6 more than when it went public 23 years ago. Getting caught up in the subprime mortgage madness they would soon come undone. In less than a year Bear Stearns would be forced to sell itself or file chapter 7 bankruptcy.

Ticker Symbol: BSC
Company Key Dates:
1923: The original company is founded by Joseph Bear, Robert Stearns, and Harold Mayer as an equity trading house.
1933: Bear Stearns opens its first regional office in Chicago, and Salim L. “Cy” Lewis–future chairman–is hired to direct Bear Stearns’s new institutional bond trading department.
1955: Bear Stearns opens its first international office in Amsterdam.
1965: Bear Stearns begins expanding retail operations in the United States and, over the next eight years, opens offices in San Francisco, Los Angeles, Dallas, Atlanta, and Boston.
1978: Alan “Ace” Greenberg succeeds Lewis as chairman.
1985: Bear Stearns forms a holding company called Bear Stearns Companies, Inc., goes public, and reorganizes from a brokerage house into a full-service investment firm.
1992: Company earnings double to over $295 million for best year in Bear Stearns’s history to date.
1993: James E. Cayne succeeds Alan Greenberg as CEO; Greenberg stays on as chairman.
1999: Bear Stearns agrees to pay $42 million to settle civil and criminal fraud charges in connection with its role as clearing broker for A.R. Baron.
2001: James E. Cayne succeeds Alan Greenberg as chairman.
2001: Bear Stearns completes construction of its world headquarters at 383 Madison Ave, New York, NY.
2003: Bear Stearns along with 9 other of the worlds top investment firms are forced to pay penelaties related to using their in house R&D release false or inflated claims to move stock prices in a favorable manor for the firm.
2006: The company had total capital of approximately $66.7 billion and total assets of $350.4 billion.
2007: Around June 2007 Bear Stearns pumps 1.6 Billion of capital in its Enhanced Leverage Fund and High-Grade Fund to keep them from closing.
2008: Bear Stearns agrees to be bought by JPMorgan Chase for $10 per share, underwritten by $29 billion in special financing from the Fed.

Company History:
Bear Stearns Companies, Inc., the holding company that owns Bear, Stearns & Company, Inc., was created on October 29, 1985, as the successor to Bear Stearns & Company and Subsidiaries, a partnership organized in 1957. The partnership, in turn, was the successor to a company founded in 1923 by Joseph Bear, Robert Stearns, and Harold Mayer as an equity-trading house. Headquartered in New York, Bear Stearns today is a full service brokerage and investment banking firm focused on three core areas: capital markets, wealth management, and global clearing services. The company maintains offices in major cities all over the globe.
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Who’s excited about the tax rebate? Not me. I was thinking about it and on the outside it seems nice, but upon further investigation , its just adding insult to injury. I am looking at potentially receiving $1,200. Not bad. Consider this; I have a 4 cylinder car, with a 13 gal. / 14 gal. tank. It costs me $46 to fill @ $3.29 per gallon. By the time May / June rolls around they are talking $4 + so now it is going to cost me $56 every two weeks. Heating and Electric run me another $150 or so per month. Then another $100 a month to keep my car insured so I can get to my job. Plus , $50 a month so my kids can watch Hanna Montana.

 So I am up to $415 and I have not even bought food to feed myself or my kids. The average family probably spends $100 to $150 per week on groceries since those have gone up substantially as well. So we will say $400, brining us to $815 per month.

Then there is rent , student loans , credit card debt, and so forth. I am not sure if this is what they had in mind when they wanted to stimulate the economy. I am not running out to buy a T.V. or put a deposit down on a new car. All the check is going to do , assuming we still get one, is help not play beat the bank for one month. I hope there are others out there working hard , and in a position to use it to have some fun. I guess I will just have to live vicariously through them.

Big moves today. I think there are a lot of stocks for sale. And with the DOW moving down so much , it looks like investors finally realized they better buy some value before things move up and they miss a good deal. I think its a good time to pick up stocks and maybe even flip some for some quick profits. Also always this is my opinion and always due your own research and seek professional advice as needed.

AP
Wall Street Whiplash: Stocks Plunge, Then Post Big Gains on Day After Fed Rate Cut — NEW YORK (AP)

It started with another stomach-turning drop at the open, and a loss of more than 300 points by midday. Then stocks changed course, raced higher and closed with a dramatic gain of nearly 300. This wasn’t just volatility. This was Wall Street whiplash.
Amid tumbling housing prices, an ongoing credit crisis and growing fears of a recession, turbulence has become a hallmark of Wall Street in recent weeks. And after five straight days of pullbacks, analysts saw some positive signs in Wednesday’s trading.

Investors certainly found a reason to buy, perhaps encouraged by the Federal Reserve’s unprecedented 0.75-point interest rate cut a day earlier and a widely held bet on another half-point cut next week. By day’s end, the Dow had swung 631.86 points from its low point to its high — the largest single-day turnaround in more than five years.

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