Real Estate professionals need RIGHT NOW.........before it's too late!!!

As economic news continues to lead most discussion these days, an issue which appeared very innocent has crept into economic and credit news and just when you thought things might turn around Real Estate professionals must protect general consumers, otherwise their market will continue to disappear....right before our eyes!!!

Credit scoring controlled by FICO and their scoring model is reeking havoc for customers whose credit is greatly affected for various reasons. FICO proved beneficial and received wide acceptance starting in the mid to late '90's and is a great tool as long as credit is flowing. The manual system previously used was literally dumped as being "out of step" as economic models called for the need to integrate technology which brought on many automated systems with the bottom line goal of making credit more affordable.

HERE'S THE ISSUE...........FICO is based on various components. One critical component is the percentage of credit used in consideration of the respective loan/credit limit. Seem simple enough - right? No one would argue with prudent credit management.......on the consumer end, as well as the creditor end. Unfortunately as the economy has spiraled out of control and the credit markets hammered resulting in many creditors going out of business or invoking provisions of their various customer agreement to generate additional interest/payment income AS MORE CONSUMERS THAT YOU WOULD THINK - ARE BEING STUNNED AND HIT WITH THE DOUBLE-BARREL BAT:

• Reduction of their Credit Limit.
• Resulting in their proportion to credit being higher therefore affecting their FICO score.

We're not arguing that creditors should not take provisions to protect themselves by controlling their exposure, nor are we arguing that consumers should not be graded on accurate data from their credit profile. What we are suggesting is we are Real Estate professionals should lobby whoever we need to so that FICO in particular amends their scoring model to the relative economy, not necessarily components used while the economy was booming. In other words, a simple handicap is suggested to either reduce the percentage of the "Credit Used" or adjust the component, so a clearer picture can be provided, without arbitrarily moving a otherwise good credit candidate into a deficient category. Obviously this is just a quick stab at the problem but the facts are clear if consumers are affected by their credit being eroded, it will affect their ability to participate in the market, currently or when it turns around because after all, it will be the consumers spending money which will get the economy moving again.

Talk to your local Board or Association of Realtors, your local consumer groups, your political representatives about this issue because while we have come to realize that FICO is here to stay, we simply want grading to be fair and adjusted accordingly as components change.

That's if you agree. Either way, what's your 2 cents????