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Credit Scores

Improving one’s credit score is a different process for everyone, depending on one’s circumstances and spending habits. For advice on doing so and insight into faulty consumer thinking, we asked a panel of experts to share their thoughts.

  • What tips do you have for a person trying to increase his or her credit score in a short amount of time?
  • What are some commonly held misconceptions about how credit scores are calculated?
  • What are the most common mistakes people make when trying to improve their credit score?
  • What is the best way for a young person to build credit?

What tips do you have for a person trying to increase their credit score in a short amount of time?

Depends on why their scores are low:

  • First step is to ensure your credit report is accurate. Get a free copy each year. You may wish to get one from each credit bureau (Experian, Trans Union, Equifax) every 4 months, then start over each year. More information about free credit reports here.
  • Do not pay collection accounts that already appear on your credit report, since that will reduce scores for the near term. Scores will increase over time. Ironically, paying off a collection account triggers a “recent remark on a derogatory credit item,” which will reduce scores in the short run. This will occur if the account status changes to “paid.” If you are trying to close a home loan, the lender may approve your loan with a requirement to pay the collection account through the closing, so it will not impact your credit score. Lenders pull a credit report the day they fund a home loan. A lower score may cause delay, a higher interest rate, or even cancel the loan.
  • If you took a “no payment until 2027” loan recently to get the free interest, pay it off. These loans are often offered by furniture retailers and the like. They are new revolving debt, usually charged to the limit with no pay history. Pay it off if possible, and your score can go up more than 60 points within a month, when the account shows paid on your credit report.
  • Get your revolving credit balances down. Mortgage lenders look at “trended data” to see if revolving balances are moving up or down. When revolving (credit card) balances increase, scores will go down. Reducing balances will increase scores. Rising credit card balances are a danger signal that someone is spending more than they earn.
  • Multiple credit inquires for a home loan within a few weeks will not impact your score. However, multiple credit inquires for cars, furniture, appliances, etc. will have an adverse impact on your score. I have seen people who enjoy driving new cars at dealerships have scores reduced due to too many auto loan inquires.
  • The obvious way to have a higher score is to pay your bills on time.
  • One less obvious credit scoring issue is that good credit history is lost when accounts are closed. Bad credit history impacts your score even if you close the account. So, if you have inactive accounts with a good payment history, you may wish to leave it open. Although too many open accounts can also reduce your score. How many accounts should be open? I suggest less than 10. I find most people have 3-5 credit card accounts.

Which are the most common mistakes people make when trying to improve their credit score?

Paying off collection accounts can be a big mistake (see above). However, some collection companies will agree to “delete” (very important distinction compared to shown as “paid”) their credit line on credit reports if the account is paid. They are not supposed to falsely report credit. But, if the account is “deleted” from your credit report, your score will improve.

Another misconception is that if you do not have any open accounts, you will have good credit. People need at least 2 lines of credit for a year to have a score calculated. People need to demonstrate good credit management skills. That is, do not borrow more than you can pay, and pay on time according to terms.

I have seen people who are trying to restore their credit take very high interest rate loans to improve their credit scores. It is very costly. I suggest getting a secured credit card. Use it monthly, with charges that you know you will pay in full each month.

Which is the best way for a young person to build credit?

Pay your bills on time. Do not build up large balances on credit cards. Do not get too many credit cards (more than 3-5). I tell my students that the credit card vendors who come to campus to sign up students should be next to the crack cocaine dealers. Both will not hurt you, as long as they are managed properly. Young people often have a disconnect from getting the money from a loan, and the obligation to pay it back. You credit score is a predictor score that expresses the likelihood that you will pay your debts according to terms. If you manage your debt load and pay according to terms, you will have high credit scores.

 

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As San Diego Home Prices Continue To Rise, Some Mortgage Lending Eases

Government controlled mortgage giant Fannie Mae is allowing borrowers to have higher levels of debt and still qualify for a home loan. Previously, the debt-to-income ratio was capped at 45 percent. Now it’s at 50 percent, making room for a larger house payment.

For example, for a household making approximately $7,000 in gross income a month, with a few hundred dollars in debt payments, it could mean a significant loan increase, said Mark Goldman, senior loan officer with C2 Financial Corporation and real estate instructor at San Diego State University.

Credit: KPBS San Diego
Posted: Friday, August 4, 2017
By: Susan Murphy
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Qualifying for a mortgage could get a bit easier

San Diego is in peak home-buying season, and the prices keep rising.

That can make it much harder for people to qualify for a mortgage. They have to show they can make the monthly payment — plus all of their current debt, including student loans, car payments and credit cards.

But starting this weekend, Fannie Mae will start backing mortgages with a 50 percent debt-to-income ratio, up from the current 45 percent. That can be big with a county median now $543,500, up about 10 percent from last year.

“If you want to buy a home and that home you wanted was a little bit beyond your capacity last month, it may be a little bit within your capacity this month,” said Mark Goldman, a loan officer and real estate lecturer at San Diego State University

Credit: ABC Channel 10 News
By: Jonathan Horn
Posted: 6:04 AM, Jul 28, 2017
Updated: 8:06 AM, Jul 28, 2017
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New Site Calculates Monthly Home Payments

Article Originally Posted on ABC 10
By: Jonathan Horn

SAN DIEGO (KGTV) – If you rent in San Diego, what you pay your landlord could be high enough to double as a mortgage payment.

Now, a new real estate website shows you just how far your monthly payment would go.

Zillow’s new website, Realestate.com, looks at all sorts of things that go into a monthly payment, such as your property tax estimate and homeowners insurance.

However, as San Diegans continue to look for homes, the question is: how accurate is it really?

At first, loan officer Mark Goldman was skeptical.

“Estimated should be bold, and underlined, and flashing,” said Goldman, of C-2 Financial.

He calculates complex mortgage payments every day using his trusted Excel spreadsheet. It includes property taxes, HOA fees, mortgage insurance and closing costs.

Realestate.com does the same with all those costs. It lets renters see how far their monthly landlord check could go to paying down a mortgage.

“I always ask the borrower what is a monthly payment for them, and a lot of times it’s unrealistic,” said Goldman.

That’s because your monthly payment goes up or down depending on how much cash you have for a down payment.

In a statement, Zillow Group says the website isn’t risky by emphasizing monthly payment. That’s because all homes start with a 30-year-fixed mortgage rate, so unlike a car loan, the payment can’t be lowered by extending the time to pay it back.

Goldman plugged in 10 percent for a $550,000 condo in North Park and adjusted the interest rate to 4.25 percent.

It would cost about $3,800 a month total.

Goldman plugged the same numbers into his Excel spreadsheet, and the result was very close.

“Based on this sample of one, I think this is a pretty reasonable estimate,” Goldman said.

Goldman said the website can’t tell all, but it does empower first-time homebuyers, and that’s a good start.


How will Trump’s tax reform impact San Diegans?

Article by: Grecia Aguilar
Credit: ABC Channel 10 New San Diego

President Trump’s outline on tax reform could have a big impact on homeowners.
Owning a home comes at a hefty price living in San Diego
“Here in San Diego, with the median house price at $550,000,” said Mark Goldman, lecturer of real estate at San Diego State.
But homeowners get multiple benefits come tax time.
Namely, they can write off the interest they pay on their mortgages and also deduct their property tax.
President Trump’s tax reform proposal may eliminate the property tax deduction.
“Will it impact a family making $70,000 to $100,000 a year? Yes it will,” said Goldman.
He said President Trump’s plan also calls for doubling the standard deduction.
So, a married couple wouldn’t pay any taxes on the first $24,000 income they earn.
For individuals, it starts at $12,600.
That may render the mortgage interest tax write-off moot for some homeowners, because they could get more back by taking that standard deduction.
But Goldman said he doesn’t see that making home buying less attractive.
“Will it change property values? Will it change the activity in the market? Will it make my house go down in value? I don’t believe it will,” he said.
With peak home-buying season about to pick up, Goldman said it’s still a good time to buy a house.

“The market is very active right now, I don’t think that this proposal will reduce values so if you’re thinking of getting into the home-buying market this summer, get to it,” he said.

Read complete article on Channel 10 News website


Rent Hikes Slowing in San Diego

San Diego State real estate lecturer, Mark Goldman, discusses how rental prices are high, but slowing, in San Diego with KGTV ABC News 10 San Diego.

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San Diego median home price hits $515,000 in March — highest point in a decade

By: Phillip Molnar

The San Diego County median home price reached $515,000 in March, its highest point in a decade and a 7.7 percent increase in a year, real estate tracker CoreLogic reported Tuesday.

“Home prices are going up faster than household incomes,” said Mark Goldman, finance and real estate lecturer at San Diego State University. “However, there is a shortage of units on the market. You have a lot of buyers chasing very few properties.”

Read full article on San Diego Union Tribune


San Diego Doesn’t Compare to Nationwide Real Estate Market Trends

San Diego State University Real Estate lecturer Mark Goldman points toward a limited amount of inventory caused by increased rentals as one of the biggest problems. NBC 7’s Consumer Bob explains.


U.S. Home Prices Surpass Pre-Recession Peak Amid Healthy Sales

U.S. home prices have fully recovered from their steep plunge during the housing bust and Great Recession, according to a private measure.

The Standard & Poor’s CoreLogic Case-Shiller national home price index, released Tuesday, is slightly above the peak it set in July 2006, after rising 5.5 percent in September from a year earlier. The milestone comes after more than four years of steady gains.

Still, prices have not fully recovered in many cities and other gauges show that home prices remain below their peaks.

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San Diego Housing Crisis Drives Some To Relocate, Others To Invest

Behind the numbers is a major housing supply problem.

“Some of the estimates are approximately 35,000 units short in San Diego County,” said Mark Goldman, a real estate instructor at San Diego State University.

“Our population is expanding, our housing supply is already too small and the growth in our housing supply is not fast enough,” Goldman said. “We’re getting further behind every year.”

Low-income and middle-class families are being hit hardest, and impacts of the housing deficit could become increasingly visible as more people are forced to double up, Goldman said.

“More people are seeking fewer units, so the obvious solution is there’s going to be more people per room,” Goldman said. “There’s just not that many places for people to live and have a home.”

Goldman said people in the upper-income bracket are the ones buying homes and sustaining the competitive market, for now.

“People who are buying those homes have incomes that are keeping pace with the rate of increase, more or less,” Goldman said. “So that’s a good thing because that reduces the possibility of another housing crash.”

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