How To Manage Your Finances Through A Divorce

by Shelton on May 27th, 2014

filed under Finances

The splitting of assets during the emotionally charged time of divorce is never easy. But there are some simple things a divorcing couple can do to ensure their assets are better protected as they resume their individual lives. For the purpose of this how-to, well assume that the couple has no prenuptial agreement. For more on that topic, see Marriage, Divorce and the Dotted Line.

Assessing Assets and Liabilities
Both individuals should create a net-worth statement to identify marital assets and individual assets, as well as any debt held by both or either party. If necessary, a financial adviser can act as a go-between. Debt can include a credit card balance, a mortgage or lines of credit. A person can obtain their credit report from any of the major credit reporting agencies.

The couple would also be wise to freeze any home equity line of credit, as it may result in a lien being put on the couple’s home. The same can be said for brokerage accounts.

When assessing their wealth, the splitting couple should also look at their anticipated income from dividend-paying stocks or any business or income from a rental property they may own. They should also assess the asset’s tax basis to determine its liability. For more on this topic, see Get Through Divorce With Your Finances Intact.

Harney: A case for looser credit scores

by Shelton on May 27th, 2014

filed under Credit Scores

Are lenders credit-score requirements for home purchasers this spring too high — out of sync with the actual risks of default presented by todays borrowers? The experts say yes.

What experts? The developers of the credit scores used by virtually all mortgage lenders. Executives at both FICO, creator of the dominant credit score used in the mortgage industry, and up-and-coming competitor VantageScore Solutions confirmed to me last week that mortgage lenders could reduce todays historically high score requirements without raising their risks of loss. In the process, many prospective buyers who currently cant qualify might get a shot at a loan approval.

Consider this: Consumer behavior in handling credit is subject to change over time, often keyed to regional or national economic conditions. Credit scores that were acceptable risks in the early 2000s — say FICOs in the 640 to 680 range — turned into larger than anticipated losers when the recession hit. Now that the housing rebound is well underway and federal regulators have imposed tighter standards on income verification and debt ratios, the high credit score cutoffs that virtually all mortgage lenders imposed in the scary aftermath of the crash are stricter than necessary.

FICO scores run from 300 to 850. Lower-risk borrowers have high scores, higher-risk consumers low scores. Early in the last decade, a FICO score of 700 was considered good enough for an applicant to get a lenders best deals or close to it. Today a 700 FICO just barely makes the grade — 50-plus points below the average score for home purchase loans at Fannie Mae and Freddie Mac, the big investors.

In an interview, Joanne Gaskin, senior director of scores and analytics for FICO, said that statistical studies by her company have demonstrated that the risk of default on more recent mortgage vintages is better than at the onset of recession — essentially real risk has reverted back to the early 2000s. A lot more people pay on time. As a result, she said, lenders can afford to take a look at their current strict scoring requirements and consider lowering them without sacrificing safety.

To illustrate how consumer behavior has improved, Gaskin cited one internal study that examined mortgage default data through 2011. At a FICO score level of 700 in 2005, roughly 36 borrowers paid their loans on time for every one who went into serious default. In 2011, by contrast, for every one defaulting mortgage borrower, roughly 91 paid on time. Thats a huge decrease in risk to the lender.

VantageScore Solutions has documented a similarly dramatic improvement in mortgage borrower payment behavior. In an article scheduled for publication this week in Mortgage Banking, a trade journal, Barrett Burns, president and CEO of VantageScore, offers an analysis based on scores of 680 and 620 from 2003 through 2012. VantageScores latest (3.0) scoring model uses a high risk to low risk scale of 300 to 850.

According to Burns, the probability of default at both score levels was lowest in 2003-05, then soared between 2006 and 2008 as the economy began deteriorating. By 2012, both scores were just slightly higher than 2005.

Burns notes that while auto lenders and credit card banks have adjusted their underwriting standards to these important changes in borrower risk, the mortgage industry has been hesitant. In an interview, Burns emphasized that mortgage lenders could expand home purchase possibilities for large numbers of consumers simply by lowering score cutoffs. They wouldnt have to loosen up on their standards on down payments or debt ratios — just their scores.

A research study last year by the Urban Institute and Moodys Analytics estimated that every 10-point reduction in mandatory credit scores on mortgages increases the pool of potential borrowers by 2.5 percent. A 50-point cut in score requirements, researchers found, would increase potential home purchases by 12.5 percent — more than 12.5 million households.

At least one major bank has concluded that lowering scores is the way to go. Wells Fargo recently announced reductions in minimum acceptable scores for conventional loans to 620 from 660. The bank had earlier lowered the acceptable score threshold for FHA loans to 600.

Could this signal the start of some fresh thinking on credit scores, a trend that other large lenders will pick up on? Lets see. If they do so, it should be a win-win for everybody involved.

Majority of UK adults do not understand finances

by Shelton on May 26th, 2014

filed under Finances

Over two-thirds of UK adults answered personal finance school exam questions incorrectly, with three out of ten scoring 43 per cent or less.

Now the OUBS has launched an eight-week online course aimed at people with all levels of financial literacy, with learners expected to commit to around three hours of study each week.

Todays youngsters are benefitting from the recent addition of financial education to the school curriculum.

But those lessons may have arrived too late for a generation of older Scots whose adult lives are blighted by poor numeracy and scant financial knowledge.

The school exam questions which so many failed covered savings, tax, currency exchange and utilities. Consumers admitted that their current lack of financial knowledge was stopping them from making informed decisions around mortgages (44 per cent) and pensions (43 per cent) right down to everyday products such as ISAs (32 per cent) loans (29 per cent) and credit cards (20 per cent).

The OUBS said: The research also suggested ignorance really isnt bliss, with 42 per cent of people admitting that their personal finances give them stress, anxiety and sleepless nights. This figure rises to 60 per cent for the 25 to 34 year old age group and falls to just 29 per cent for the over-55s.

The research also revealed that almost half of all UK adults never keep a household budget, while a third suffer a monthly deficit with more going out than they have coming in. This leads to more than one in seven adults regularly exceeding their agreed overdraft and incurring significant bank charges, adding to their financial woes.

A separate survey conducted by Scottish Friendly last month found that half of the population do not know the difference between a cash and an investment Isa. Their ignorance may have cost them dearly over the last five years, as the mutual calculated that an average UK all-companies investment Isa has earned pound;1,279 more than a lacklustre savings Isa.

Neil Lovatt, director of savings at Scottish Friendly, said: People will naturally sway towards a cash ISA as it is the simplest to understand and there are a number of misconceptions floating around about what it means to invest in a stocks and shares ISA.

With most cash ISAs currently offering poor returns, one thing that may be holding people back is a lack of understanding about how investment ISAs work.

Even those who pride themselves on being financially capable may be surprised at how much they fall short of their ideals. Confident consumers are being challenged to use Britains Money Management Barometer to find out whether their intention to save, invest, steer clear of debt and stick to budgets translates into reality.

Dr Martin Samy at Leeds Business School has devised the quiz, available on the TD Direct Investing website, to help people understand their true relationship with money. He said: Relationships of any kind are created through the two factors of perception and behaviour. It is the difference between how you perceive yourself and how you act that provides you with an index or score that simply assesses your relationship with money and, in turn, helps you to make effective financial decisions.

The online OUBS course is run with the True Potential Centre for the Public Understanding of Finance.

David Harrison, managing partner of True Potential LLP, said: Investing and finance can be simple to understand subjects that are frequently made very complicated and inaccessible. We have set up this centre to democratise finance and make financial education more readily available.

These courses will arm people with the knowledge and information they need to make informed decisions about their finances, or to ask the right questions of the right people.

If your financial weak-spots are keeping you awake at night, you may find a new tool from the Money Advice Service helpful. The Money Worries interactive tool asks a series of questions to determine the impact of financial concerns on your wellbeing before pointing you towards other resources, like the sites budget planner and money health check, that should help to get you back on track.

Ian Williams, spokesman for Debt Advisory Centre Scotland, says: Many of the people we speak to have left it so long to get help and support with their worries about problem debt they admit the stress has started to affect their wellbeing. Thats why its so important to seek out the support thats needed as soon as possible.

Meanwhile this week RBS launched a new version of its Pigby money-saving app for children.

Designed by Aardman Animations, it features an interactive playground to inspire kids to save in the banks First Saver account.

Provincial scoring of municipal finances doesn’t necessarily add up to reality …

by Shelton on May 26th, 2014

filed under Finances

It depends on how you are interpreting the numbers, Stewiacke Mayor Wendy Robinson said, of the online reports released by the province as a way to help alert the public to financial difficulties faced by local governments.

So one of our red lines talks about whether we have money in the capital savings department, Robinson said, of the provincial score of 0 the town received under the five-year contributions to capital reserves category.

The zero score compares to a 13.8 average mark that towns received across the province, but Robinson said the scoring method doesnt really reflect an accurate picture for Stewiacke.

We do have reserves but we put them in the operating side of things because it is easier to get at, she said. So we have money saved, its just in a different bank account.

The municipal indicator scores are shown through both numbers and colour coding, with green used to indicate that a given town or municipality meets both a threshold and a town average. Yellow means a given community meets the town threshold but does not meet the town average, while red means it does not meet the town threshold.

Stewiackes total score includes seven red lines, five greens and three yellow.

We always run a balanced budget, Robinson said, adding that while the town has a smaller commercial base than some communities, it is well poised for future growth and the existing commercial and residential base provides more than enough revenue to meet current demands.

So we feel quite comfortable looking to the future, she said.

The County of Colchester received a score totalling nine yellows, three greens and three reds.

But as with Robinsons assessment, Mayor Bob Taylor said the scoring results dont necessarily translate into a true, up-to-date picture of the municipalitys finances.

I dont know how they extrapolate the figures, he said, especially given that the information used for the report cards is more than two years old.

Its like a snapshot in time, he said. Pretty well everything we had, theres a good explanation for it.

A case in point is Colchesters score for reliance on government transfer, for which it received a yellow. The rural municipality threshold for that category is below 15, with the rural municipal average for that category set at 4.9. Colchester received a 7.7 score.

But that was the year we got the funds from the feds and the province for the civic centre, Taylor said.

While the scores may be useful to a point, Truro Mayor Bill Mills also expressed some skepticism about their overall accuracy.

Truros in pretty good shape and were well aware of where we are as far as our debt levels are concerned, he said, of the towns 1.7 or yellow score for outstanding debt, compared to town average of 1.3.

My first response is these are indicators and they are essentially about two-and-a-half, three-years-old, he said.

The town received nine greens, four yellows and two reds on its report card.

And while Mills acknowledged that Truro will have to pull back in some areas as far as major capital projects are concerned, for the most part, all of our ducks are lined up.

We are staying the course, he said. The good thing is, the librarys is the last town-owned building that will need attention on the scale that we have been dealing with over the years.

But at the end of the day, Mills said, quoting a favourite phrase of a former town CAO: Things could be a hundred times better and a million times worse.

The full municipal scoring indicators are available online at: .

hsullivan@trurodaily news

Twitter: @tdnharry



Geographic location:

Stewiacke, Colchester

Demystifying Credit Scores

by Shelton on May 25th, 2014

filed under Credit Scores

One of the few positive outcomes of the 2008 financial crisis was that it helped shine a light on the importance of understanding and staying on top of your credit profile. Along with that heightened visibility, however, has come a great deal of confusion and misunderstanding — particularly around the all-important credit score.

The consequences of not maintaining a sound credit score can be very costly, says Anthony Sprauve, senior consumer credit specialist at FICO. A low score can bar you from getting a new loan, doom you to higher interest rates and even cost you a new job or apartment.

Heres what often happens to people with poor, or even fair, credit scores:

  • Its harder to qualify for a mortgage, youll need a bigger down payment and youll pay a higher interest rate, which adds up over time. According to this MyFICO calculator, someone with poor credit might pay an extra $103,305 in interest over the life of a typical 30-year, $300,000 mortgage, compared to someone with excellent credit.
  • Similarly, someone with a poor score might pay an additional $10,400 in interest on a 60-month, $25,000 auto loan.
  • Credit card interest rates are often 10 or more percentage points higher and credit limits are typically much lower.
  • Although credit scores arent factored into federal student loan interest rates, they are with private student loans, often resulting in much higher rates.

Five factors are used to determine your credit score: payment history (usually around 35 percent of your score), amount owed (30 percent), length of credit history (15 percent), newly opened credit accounts (10 percent), and types of credit used (10 percent). These five categories may be weighted differently depending on your individual circumstances.

Fortunately, if your credit score has taken a hit, you can initiate several actions that will begin improving it almost immediately. Just be aware that it can take many years to recover from severe credit-damaging situation such as bankruptcy or foreclosure.

First, find out where you currently stand by reviewing your credit reports from each major credit bureau (Equifax, Experian and TransUnion). Look for negative actions your creditors may have reported. Also, look for errors (like mistakenly noted late payments) and fraudulent activity on your accounts and challenge them through the bureaus dispute resolution process. You can order one free report per year from each bureau through the government-authorized site,; otherwise youll pay a small fee.

You might also want to order your credit score. Lenders use credit scores to supplement their own selection criteria to determine whether you are a worthy credit risk. Several types of scores are available, including FICO® Score, VantageScore (a competing model jointly created by Equifax, Experian and TransUnion) and proprietary credit scores from each of the three bureaus, among others. Scores typically cost from $15 to $20 each.

Note: You may see offers for free credit scores, but theyre usually tied to expensive ongoing credit-monitoring services you may or may not want. Read the contract carefully.

Credit score ranges vary depending on the version being used. According to Sprauve, Each lender ultimately decides for itself what constitutes a good score, but we find that FICO scores above 720 generally will qualify you for the best available interest rates and loan terms. FICO scores below 650 are usually considered poor and may make it tough to even qualify for a loan.

Here are a few tips for improving your credit history:

  • Always pay bills on time and catch up on missed payments. A few late payments can be very damaging.
  • Set up automatic payments for recurring bills and automatic minimum credit card payments if you often miss deadlines.
  • Sign up for text or email alerts telling you when your balance drops or payments are due.
  • Never exceed credit card limits.
  • Monitor your credit utilization ratio (the percentage of available credit youre using). Try to keep your cumulative utilization ratio — and the ratios on individual cards or lines of credit — below 30 percent.
  • Transferring balances to a new card for a lower rate will slightly ding your credit score — although it wont take long to recover. But be careful the transfer doesnt increase your utilization ratio on the new card.
  • Make sure that card credit limits reported to the credit bureaus are accurate.
  • Dont automatically close older, unused accounts; 15 percent of your score is based on credit history.
  • Each time you open a new account it slightly impacts your score, so avoid doing so in the months before a major purchase.
  • Pay off medical bills, as well as parking, traffic and even library fines. Once old, unpaid bills go into collection, theyll appear on your credit report.

Sprauve has a good suggestion for people who put most purchases on a single credit card to earn higher rewards: If youre paying your balance off every month anyway, pay it off midway through the billing cycle and then again at the end of the month so your reported outstanding balance appears lower, he says.

Bottom line, dont lose hope, adds Sprauve. The negative impact of past credit problems will gradually fade as recent good payment behavior begins to show up on your credit reports.

To learn more about ways to repair and protect your credit scores, visit MyFICO.coms Credit Basics Center, the Consumer Financial Protection Bureaus Credits and Loans and Credit Reports and Scores websites and Whats My Score, a financial literacy program run by my employer, Visa Inc.

This article is intended to provide general information and should not be considered legal, tax or financial advice. Its always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.

Facing up to mortgage reality

by Shelton on May 21st, 2014

filed under Unsecured Finance

So when Mortgage Strategy had banking deposit and loan software provider Phoebus Software managing director Paul Hunt and its sales and marketing director RIchard Pike to be interviewed, understandably this was one of the first questions we asked.

Phoebus was set up in 1989 but it was after 2004 that the company rapidly expanded in the boom years, providing the IT muscle for now long departed start-ups like edeus and lenders like Heritable Bank.

Despite the downturn and the obvious setback of watching clients like Heritable croak (it collapsed with its Icelandic parent group Landsbanki in 2008), the firm has continued to be linked to start-ups like Precise Mortgages and Masthaven, with a reputation for some of the most up-to-date systems in the market. 

So perhaps it’s not surprising that Hunt’s immediate answer to the question of what he predicts the future of getting a mortgage to be is not on-screen technology or even greater use of the internet to transmit data but is instead virtual reality. 

“The main problem with it is, how do you type?” says Hunt, twiddling his fingers in the air as he describes the brave new world of technology that could soon be helping us all communicate.

“You’ve got your screen on, you’ve got this thing wrapped round your face, so how do you see the keyboard?”

But despite the current pitfalls of virtual reality technology Hunt really does believe advisers, lenders and consumers will soon be communicating via a pair of virtual reality goggles.

“With virtual reality, I do really believe it is the future,” he says.

He argues they will no doubt get over problems like how to type while wearing the headset and points to social network giant Facebook’s recent purchase of virtual reality firm Oculus Rift for $2bn as a sign that the wider market will eventually embrace it. Virtual reality has been around for decades and its last stab at popular attention was the 1992 science fiction horror film Lawnmover Man.

But Hunt explains that incredibly there are now predictions that there will be a virtual reality head set on every desktop in a couple of years. “We’ve got some guys at work who love Oculus Rift and have a developer’s licence,” he says.

And however they do it, with the recent change over to the MMR there is now an increased focus on how lenders interact with clients.

“The biggest thing from an origination point of view for lenders right now is how they communicate with clients,” says

“Whether that’s face to face or via a video conference facility or even an instant messaging service, if a person is filling in an application they can talk to someone directly at the same time.”


The IT Crowd

Clearly Hunt is passionate about the possibilities of IT but then his background has been in IT, having done a computer science from the University of Manchester in the 1980s.

“Back then I was dealing with computer languages like Pascal and Cobol,” he says. “You didn’t have PCs on everyone’s desk, you had ZX Spectrums, BBC Micros and you had to learn how to build computers from scratch and learn how to programme them.”

He then moved to Nottingham for three years to train to become a chartered accountant. When he qualified in 1994, he moved to the British Overseas Territory in the Western Caribbean Sea of the Cayman Islands to work for PriceWaterhouse, with the initial aim that he would work there for two years.

But six months after arriving he joined a Canadian bank located in the Cayman Islands, where he stayed for the next six-and-a-half years. So, he had a good job on a sunny Caribbean island – the obvious question is why did he return to the clouds and drizzle of the UK? “My wife,” he says laughing. “We had some kids over there and she said they needed their family around them so we came back.”

He then joined a company called LaSer in the UK as head of finance in 2001 before joining Phoebus in 2004. When he joined, Phoebus was a small company of 14 employees, with a customer base of eight. The company had been going since 1989, with new clients up to that point generated by word of mouth.

“They were a company of engineers who built the system because they just enjoyed developing software,” he says. “The software was top notch because they were very good engineers. They just needed someone to grow the business and that was my job.”


Boy to man in banking

By contrast, Hampshire-born Pike has his background firmly rooted in banking, having first joined Royal Bank of Scotland straight out of sixthform college.”I joined the Basingstoke branch and we were raided on my first day,” he says.

“Actually I say raided, it was a bit of a strange set-up. It was 1987, you did all your cash and cheques in the counter but they didn’t have a big enough branch so, and I’m not joking, they had a sub- office down the road so they would take a trolley full of money and cheques down the road to process. My job was to push that trolley along and on my first day someone had obviously seen it happening.”

Despite becoming a victim of organised crime on his first day, he stayed with the bank until 1989 when he joined a company called Mortgage Systems Limited in Fleet, which subsequently turned into third-party outsourcing firm HML.

In 1992, he was asked if he wanted to relocate to Skipton as the company was closing its Fleet office down but he declined the offer and instead went to work for Cheltenham amp; Gloucester as an assistant branch manager. Over the next eight years he had a variety of roles ranging from BDM, mortgage centre manager, branch manager and then he centralised all arrears and collections out of branches into a call centre in Gloucester.

He then went to work for Marlborough Stirling, now known as Vertex, setting up its outsourcing operation, and then in he worked for regulatory and compliance solutions firm Huntswood between 2002 and 2003. “In 2003 I had a mid-life crisis and decided to go out alone and set up my own consultancy business,” he says. His company, Independent Business Consultant, touched on all parts of banking and Pike used his wide range of connections to capitalise on the buoyant market at that time and he worked with the likes of Kensington Mortgages, Santander and Edeus.

But the credit crunch hit and in 2008 he had to let his consultants  work on a daily rate and continued doing that until he joined Phoebus in 2011.


The boom years

Four private individuals ultimately own Phoebus – three of them set up the firm originally and Hunt bought into the company when he joined back in 2004.

In the early years of Phoebus, its system was primarily a banking solution covering deposits, cost of lending, first and second charge lending, equity release and a little bit of debt finance.

From 2004 to 2007, post-Mortgage Day, the big push among mortgage software engineers was on origination platforms.

But anyone around in the market back then will remember that when the mortgage market shifted from self-regulation under the Mortgage Code Compliance Board to the ultimately flawed control of the Financial Services Authority, many lenders’ systems were found wanting. There was a six-month blip, where with some lenders intermediaries were unable to do business. Many intermediaries were left wondering what had gone wrong and why there were
such delays.

Come Mortgage Day in 2004, Hunt says Phoebus’ clients like GE Money, Money Partners (which was initially set up by Kensington and sold to Goldman Sachs before being closed) and doomed Heritable did not have a problem because the Phoebus system was designed to be flexible, with lenders easily able to update or change the software as regulation or business practices changed.

But that was not the case with many of the established systems that had been around at the time. 

“It was because there was no flexibility in those systems and the fact that at that time they had old archaic systems and their systems were not able to change,” he says.

In the boom years, Phoebus grew the company from 14 staff to 55 but the collapse of its then client Heritable Bank, which went down with the collapse of its parent group Landsbanki in 2008, led to a slump and other clients were also starting to pull back.

“That hurt us for about three months,” he says. “So we made some redundancies, brought the staff down to 40, got ourselves realigned and then we made a conscious decision not to cut our sales and marketing.

“It’s one of those classics, it’s really important to keep your name in the marketplace and actually you can get the biggest competitive advantage when other people are struggling.”

A lot of its competitors exited as a result of the downturn, with the market contracting from around 10 active software providers to three or four. Many he says have now turned into third party outsourcing firms.


Spotting the upturn

In the downturn, the focus shifted from originating new loans to collecting debt but Hunt says that started to change  24 months ago and they once again had firms contacting them about originations.

“A lot of people wanted to lend in a regulated market and to do that they needed a licence, funding in place and the third bit is they need a system in place,” he says.

“So we knew then that things were starting to pick up. In 2011 at some stage there were five applications in for a new bank and today there are 24 challenger banks trying to get a new licence. Compared with today, the market has improved massively.”  

Phoebus’s system works on a modular basis so if a secured lender wants to into bridging or vice versa, it just plugs in another module

It offers modules for deposits, first and second mortgages, development finance, bridging, asset finance, unsecured finance.

“Anyone that is looking to come into the market today in the challenger bank environment, they are probably not going to do current accounts and first mortgages,” says Pike. “A lot of them are going to do deposit taking and high rate margin areas like development finance and commercial lending. But if they said in six months time they want to do unsecured, we’ve got a module they can use which still uses the same database at the bottom.”

And to that end he points to bridging lender Masthaven as an example of a client that expanded out into secured loans.

“We want to make sure that the product is recognised as a banking system and not just a mortgage origination platform or servicing platform, we can do other functionality that banks require,” says Pike.

As to whether it is becoming easier to set up lending brands, Hunt says the big question is whether they get a licence.

“We’ve been involved with a lot of firms and a lot have been turned down historically,” he says. “People have to be cleaner than clean with a strong proposal, otherwise they won’t get a licence.”


A very emotional subject

The other occupational hazard of being a software company focusing on the mortgage market is obviusly the constant change in regulations. Since the downturn properly struck in 2008 with the collapse of Lehman Brothers, a whole host of products such as self-cert mortgages and fast-track have gone.

And with the introduction of the MMR at the end of April there have been another set of rules to take on board covering affordability, disclosure and particularly data reporting for lenders. 

“We have built the system in the way that we have so that it is adaptable, because there is always something coming around the corner,” says Hunt. “The hard part is not building the system, it’s interpreting the rules.”

A good example of this is affordability. Lenders’ affordability calculators now need to take into account three main elements – committed expenditure of applications like credit and contractual agreements, basic household essentials like heating, water, council tax and buildings insurance and finally basic quality of living costs which are hard to reduce like clothing, household and personal goods, basic recreation and childcare. Stress testing is another contentious issue and it’s easy to speak to a wide number of lenders and get contrasting views on exactly how lenders should proceed in the MMR world. 

“Every lender has a different interpretation – affordability is a very emotional subject,” Hunt says diplomatically.

And returning to our first question about new technology that could change the face of mortgages, while virtual reality might be a long way off, his other prediction is that social media like Twitter, Facebook and Google+ will become more integrated. A number of intermediary firms have made the likes of Twitter a key part of their business and he expects this to grow. To that end, it already has social media plug-ins that its lending clients can insert into their systems to communicate with clients.

“In the short term it will be about using instant messaging, any form of social media in a business sense,” says Hunt. “There is still social media and business and the two are not that close together.

“So to use those social media tools that have been developed  by these huge companies in the business world will be a huge step forward. It will allow you to talk about a mortgage with a guy in a farm house without going out there. You can take all the hassle out of it.” l

Calculating Credit Scores

by Shelton on May 21st, 2014

filed under Credit Scores

Over the past couple of months I have spent a considerable amount of time researching credit scores and factors that have the largest impact on them.

Thanks to websites like and, as well as multiple blogs on the subject, there is a lot of information out there.

First, it is important to understand how your score is calculated.

As you can see from the chart I found on, the amount you owe and your payment history impact your score by 65%. Of the amount you owe, revolving credit (such as credit cards) can have a huge impact on your score. For example, if you carry high balances on your credit cards and the amount you owe is close to the credit available to you, it can have a negative impact.

You can improve your score very quickly by paying down the amount of credit card balances that you owe. While you might think that paying them completely off would have the biggest impact and make your score the highest, that may not always be the case.

There are multiple opinions out there that your credit score may actually be the highest if your balance to available credit ratio is in the 10% range. (Less than 15%) This may indicate that you are not living above your means and that you use your credit responsibly. Your credit score could vastly improve if you paid your balances down below 50% of your available credit, and even more so if you paid your credit card balances down below 33% of your available credit. Several of the “experts” agree that the 10% balance to available credit ratio might be the sweet spot in regards to revolving credit.

Why is this important? The better your credit, the better interest rate you will qualify for on a mortgage. For example, you could take a look at your credit now to see if there are ways you could improve your score to above 740 or 780, which might save you .125 or better on a mortgage interest rate, which would save you thousands of dollars in interest over time. 

Many of these websites have what they call score simulators, where you can actually see what your score would be if you took certain actions such as paying down credit card balances as we discussed above. Check it out! -mr

Please feel free to send your questions. Rest assured I will only use your first name. Email them to:

Or mail them to:

Questions for Mike Randall

Coldwell Banker Pinnacle Properties

2093 Florence Blvd, Florence, AL 35630

Mike Randall, REALTOR® Associate Broker | ABR, CRS 256.366.9779 | Coldwell Banker Pinnacle Properties 256.766.0069 Office 256.766.0926 Fax

A case for looser credit scores

by Shelton on May 21st, 2014

filed under Credit Scores

A case for looser credit scores

Executives at both FICO, creator of the dominant credit score used in the mortgage industry, and up-and-coming competitor VantageScore Solutions confirmed recently that mortgage lenders could reduce todays historically high score requirements without raising their risks of loss.

Debt Consolidation USA Provide Tips To Solve The Top Financial Worries In 2014

by Shelton on May 20th, 2014

filed under Debt Consolidation

Debt Consolidation USA publish an article that provide consumers with tips to help them solve the top financial worries in 2014.

New York, NY (PRWEB) April 16, 2014

Debt Consolidation USA published an article on April 11, 2014 that discussed the top financial worries that consumers are facing in 2014. The title of the article is “Top Financial Worries In 2014: 1 Out Of 5 Americans Vote Insufficient Funds.”

The article was written in reaction to the latest survey released by the National Foundation for Credit Counseling. The 2014 Consumer Financial Literacy Survey is published on and it revealed that 1 out of 5 Americans are worried about two things. One is their emergency fund and the other is their retirement fund. According to this survey, consumers are still lacking in terms of reaching their saving goals.

The survey revealed that the financial worries are caused by a lack of budget, saving motivation and credit card debt.

To address this problem, Debt Consolidation USA provided tips that will help consumers meet their saving goals and thus eliminate any financial worry.

1. Have a realistic budget plan. The article specified that it has to be realistic so it is easier to stick too. A budget plan can help consumers ensure that their savings are funded every month.

2. Revise spending habits. Another tip provided by the article is to change the purchasing habits of the consumer that is causing them to spend unnecessarily on things instead of saving. The article also advised against spending on things that the consumer cannot afford.

3. Choose to spend less on usual expenses. According to the article, consumers should learn how to buy cheaper products without sacrificing quality.

4. Automate the savings. To make sure that there is money being sent to the savings account, the article advised consumers to automate the transfer every month. That way, the money they will receive is already the net income. It will keep the consumer from missing their savings and thus be kept from the temptation of spending it.

5. Cut back on expenses. The word used by the article is actually to downsize. The article explained that if consumers cannot meet their monthly savings and expenses, they might be living a lifestyle that they cannot afford.

6. Look into tax breaks. The article mentioned that consumers may want to increase their net income by looking into tax breaks. That should help them increase their saving funds.

The article mentioned that consumers should not be discouraged if they can only save up a small amount at a time. This will become a big amount in time. The important thing is to continue saving and to be consistent at it.

To read the whole article, visit this link:

Debt Consolidation USA is a debt relief company that advocates financial literacy. They have published hundreds of articles on their website to help consumers in self education. They can find informative articles about personal finance, debt and debt relief. They can also help with debt relief. To find out more, call 1(877)610-6990.

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Find the best credit card for you

by Shelton on May 20th, 2014

filed under Secured Credit

Before you apply, take a look at your credit report. Like any line of credit or loan, your credit score is the single most important factor when finding the type of credit cards available to you and getting the lowest interest rate.

Unsure how to get a copy of your credit report? provides consumers with annual credit reports at no charge.

Whether you’re establishing or repairing credit, want to pay down a high balance, or you pay your balance in full every month, there’s a credit card for you.

If you’re building or rebuilding credit, consider saving for a secured credit card. According to, even though you’re required to make an upfront deposit of $200 to $500, a secured credit card will help you build credit, with the possibility of graduating to an unsecured credit card.

Unsecured cards are issued to those with a good credit report without having to make an upfront deposit. Some secured cards have no annual fees, but most do. As a rule, avoid secured credit cards with an annual fee of more than $50.

“If you carry a high balance on your credit card and want to reduce your debt, you may want to transfer your balance to a lower interest rate card,” Mendoza said.

“While looking around, you’ll find a number of zero-percent introductory balance transfer promotions. Just make sure you read and understand the fine print.”

She said you also need to find out if there’s a balance transfer fee and what the interest rate will be when the promotion ends.

If you have an exceptional credit score, use your credit card for most purchases or pay your balance off every month, a rewards card may be an attractive option.

With a rewards credit card you can earn cash back, airline miles or points on each purchase you make, but it comes at a higher price. While rewards cards have a higher annual fee and higher interest rate, many consumers feel the rewards are worth the additional cost.

How do you sift through all the credit card offers you receive online or in the mail? You can check out a number of online sources that provide credit card comparisons within minutes, like or

Researching the credit card that’s right for your lifestyle and then using your card responsibly can be a useful and valuable tool in the long run.