Will Credit Get Even TIGHTER?
How does market confidence affect availability of credit? Wall Street created the financial vehicles we all use to buy everything from groceries to cars, student loans and homes. Unfortunately, the current financial chaos around 'fractonal lending' and how they resell 'risk' is causing Congress to step in and impose tighter guidelines. Better late than never? For starters, a new FICO -08 Credit Scoring model is in the works at Fair Issac. This model, due for release in a few months, is designed to 'drill down' and more effectively split borrowers into more accurate risk categories. While we are hearing different reports about this model, the overall effect on lending could mean banks will feel 'more informed' and confident about to whom they are lending. New tighter rules for appraisals, national licensing of loan originators, and higher lending guidelines are helping validate higher standards all around. All good. Of course, nothing beats good old...