CREDIT, CREDIT, CREDIT

Why is credit so hard to get these days?  It seems that the banks have tightened the reins on lending at a time when lending is needed.  So, I decided to do a little research. 

Four factors are in play that cause credit denial for housing needs.  The first item is federal mandates.  All national banks are moving to a 5% (or close to 5%) minimum monthly payment on credit cards, instead of the 1-2% that existed in the recent past.  While in the long run this helps to pay off balances quicker, in the short run it puts pressure on the monthly budget by raising monthly payments. This could raise your debt payments $300 to $1000 per month for the average Rhode Islander.

Secondly, the lack of  home equity and the downturn of the housing market has lenders worried.  Since these properties are securing the notes, Lenders are not willing to adjust appraisal values, thus affecting lending approvals.

Thirdly, the increase in the cost of fuel has hammered Rhode Islanders.  The average 2 car household saw a $50-$100 monthly increase in 2007.  Add to this a 30% - 50% increase in home heating and you can see why debt to income and other ratios have hurt potential buyers from getting credit.

Last but certainly not least is the change in the bankruptcy laws in 2005.  To prevent  the wealthy from filing chapter 7, a full relief of debts, there is now a qualification that needs to be met to file chapter 7.  Many cannot qualify and are forced to chapter 13, a restructuring of debt, or credit counseling.  These factors have added to budgets that take potential buyers out of the housing market.

In the next few weeks, I will be adding several pages to this website concerning credit repair, credit enhancement.  I will take a deeper look at credit and we can together explore ways to improve our credit and better our lives.  So, come back soon. I promise it will be worth your time and effort.

If you need some free reports about short sales and loan modifications, visit my other site at www.MarkBrownRI.net .  Also please check out my profile on LinkedIn.   Click here  http://www.linkedin.com/in/markbrownri