Monday, January 31, 2011

Pending Home Sales Rise Again:

Following the trend of last week's 12.3% jump in Existing Home Sales, Pending Home Sales rose 2% according to the National Association of Realtors. A Pending Home Sale is counted when a contract between the buyer and seller has been completed but the house has not closed yet.

The monthly gain from November to December was double the expectations of economists and is the fifth monthly gain out of the last six months. Both Existing and Pending Home Sales continue to show monthly gains even though there has been no tax credit for some time which shows that there is genuine demand for housing. Many buyers are finally getting "off of the fence" with the steady rise in thirty year fixed rates.

Simple Tips to Change Your Financial Behavior

By Gregory Karp

RISMEDIA, January 31, 2011—(MCT)—Americans have a renewed interest in all things frugal during this recession. They’re spending less money, using credit cards less, and the terms “frugalista” and “bargainista” have entered the daily lexicon.

Keeping up with the Joneses now means one-upping a neighbor with bargains you got at the consignment shop and bragging “my coupon is better than yours.”

But will it stick? Will our frugal ways remain after the Great Recession fades? Or will a pent-up wave of consumer spending eventually break through the restraint? More important, if we’re worried about financial backsliding when good economic times return, what can we do now to make sure we stay on track?

Recent reports suggest we have good intentions to maintain our fiscally responsible ways.

About half of Americans report they either avoid shopping altogether or shop only for those things that are absolutely needed, according to a survey sponsored by Citi. And 72% of Americans say they have cut back on everyday expenses.

“Only time will tell, but my hunch is we’re entering a new era of frugality,” said Jonathan Clements, director of financial education with Citi Personal Wealth Management. “We are 15 months into the economic recovery…and yet consumers are telling us that they are continuing to cut back on their spending.

“This recession will be like the Great Depression was to our grandparents.”

In addition, 80% of people claim to have at least a general plan for income and expenses, up from 47% in 2006, according to a survey by Synovate commissioned by personal finance author Matt Bell.

“Budgets have always been the Rodney Dangerfield of personal finance tools,” said Bell, who writes the blog. “But just as we’ve seen the recession bring about other changes in people’s financial behavior, such as more frugality, the lowly budget finally seems to be getting some respect.”

But Bell said he knows from working with financially distressed people that a “general” budget plan can mean simply balancing a checkbook or having a rough notion of what a consumer is spending on things. “My fear is that if and when the economy improves, those general plans will become even more general,” he said.

Since consumer debt peaked in 2008, Americans have chopped $922 million from their debt, or 7.4%, according to the Federal Reserve. Americans are reducing debt at a pace unseen in at least a decade, according to a recent Fed report, “Have Consumers Become More Frugal?” Unclear, say researchers, is whether that new frugality stems from borrowers being forced to pay down debt as credit standards tighten, or whether it’s a voluntary—and permanent—shift in behavior.

Farnoosh Torabi, author of the new book Psych Yourself Rich, said she thinks the most recent recession, though technically over, affected people more than the tech bubble of 2001 and other minor economic recessions because its effects have persisted for so long. Young people, especially, are likely to benefit.

“They got to see early on in their lives how overspending can derail you and divert you from your goals,” she said. And they saw it from a variety of directions, whether parents getting laid off or graduating school to enter a lousy job market, she said. “They had a 360-degree wake-up call about how money is the foundation of your livelihood. That’s a valuable lesson for this stage of life.”

The trick is moving from the descriptive to the prescriptive: “How do we make these frugal behaviors last?”

Change your words: Instead of viewing your newfound financial responsibility as a temporary exercise in deprivation, view it as a lifestyle and make peace with it. Author Jeff Yeager calls it slaying your Enoughasaurus, knowing when you have enough and being content with it. “I would ditch the word ‘frugal,’ ” Bell said. “It sounds like someone who obsesses over saving a nickel on every can of tuna they buy. In my workshops, I never talk about being frugal. I talk about spending smart.”

Have goals: The easiest way to say no to the tempting purchase in front of you is to have a specific reason to reject it. “You need a reason for doing whatever it takes to spend smart, a goal that motivates you,” Bell said. “Getting out of debt. Taking a great vacation. Whatever you’re trying to achieve financially.” In your head, the monologue sounds like, “I’ll pass on buying this sweater because I really want to go to the Bahamas in February.”

Track progress: “Monitor your decreasing debt or your increasing vacation fund,” Bell said. “When you see that spending smart is getting you closer to the accomplishment of your goal, that’ll motivate you to keep going.”

Make savings automatic: The easiest way to save is to do nothing. Put your savings on autopilot with automatic paycheck contributions to a retirement plan or direct debits from checking to savings. “If people are saving diligently now and want to keep it up, harness the power of inertia and make it automatic,” said Clements, a former financial columnist and author of four personal finance books.

Make a windfall rule: Most people periodically receive sudden inflows of cash, whether a tax refund, a year-end bonus, an insurance reimbursement or a gift. Make a rule that all windfalls are used for paying off high-interest debt or for savings, Clements said. That way, you improve your finances without affecting your daily lifestyle. A less-rigorous rule would be to blow 10% of the money on something fun so you don’t feel deprived.

“People have been shocked into better financial behavior,” Clements said. “The trick is to make sure they stick with it.”

(c) 2010, Chicago Tribune.

Thursday, January 27, 2011

Survey: Mortgage Rates Steady

RISMEDIA, January 27, 2011—Mortgage rates have remained steady, according to the latest figures from Current 30-year conforming fixed mortgage rates are at 4.625 percent, 15-year conforming fixed mortgage rates are at 3.875 percent and conforming 5/1 adjustable mortgage rates are at 3.125 percent. Well-qualified borrowers are able to take advantage of these low conforming mortgage rates with only 0.7 to 1.0 percent origination fees.

Current 30-year fixed FHA mortgage rates are 4.500 percent, 15-year fixed FHA mortgage rates are 4.000 percent, and FHA 5/1 adjustable rate mortgage rates are 3.125 percent. FHA mortgages have more favorable loan terms than conforming mortgage rates. The tradeoff, however, is the higher closing costs associated with an FHA loan. Additional fees that the Federal Housing Administration charges to borrowers include upfront mortgage insurance premiums, annual mortgage insurance premiums, additional residential appraisals, etc.

Jumbo mortgage rates are likewise currently stable. Current 30-year fixed jumbo mortgage rates are 5.125 percent, 15-year fixed jumbo mortgage rates are 4.750 percent, and jumbo 5/1 adjustable mortgage rates are 3.875 percent. Borrowers interested in obtaining a jumbo mortgage loan are able to do so in excess of the conforming loan limit for their desired area.

Mortgage back securities (MBS) prices are currently higher today than yesterday. MBS prices have in increased by +9/32 (FNMA 30-year 4.5 at 102.11). Mortgage rates and MBS prices have an inverse relationship, which means they move in opposite directions. Therefore, as MBS prices increase, mortgage rates are expected to decrease.

Wednesday, January 26, 2011

Art Exhibit: Obscure Observations II (Nature inspired paintings)

Date: 2/1/2011 - 3/31/2011
Address: Mass Audubon's Broadmoor Wildlife Sanctuary 280 Eliot St. (Rt.16), Natick 01760.
Location: Natick, MA
Hours: Nature Center Hours: Tuesday-Friday, 9am-5pm/Weekends 10am-5pm. Closed Mondays.
Cost/Cover: Free admission to nature center and exhibit gallery
Contact Info: 508-655-2296
Details: In her second painting exhibit at Broadmoor, Lindsay Nygaard has included a spectacular display of her interpretation of the natural world.

The exhibit runs February 1-March 31.

The public is invited to the exhibit opening: Sunday, February 6, 2-4pm

Exhibits are free and open to the public during Nature Center hours.

The artist’s work can also be previewed at:


Event is on: Every Tue, Wed, Thu, Fri, Sat, Sun
Audience: All Welcome
Category: Exhibits
Sponsored By: Mass Audubon’s Broadmoor Wildlife Sanctuary
Submitted by: Broadmoor Education Coordinator

Monday, January 24, 2011

Existing Home Sales Jump Again

Despite bad weather, U.S. home sales jumped more than expected in December. Sales of previously occupied homes soared 12.3 percent last month which far surpassed national forecasts of an increase of only 4.5%. This marks the second straight month of significant gains in sales. In November, Existing Home Sales surged 6.1%. The national median home price in December was $169,300 which was only 0.2% lower than levels a year ago. This is important to note because 36% of homes sold in December where under the "distressed" category. And even though this is a larger than normal percentage of sales, the national median home price barely moved. In fact, it actually increased in some ares such as the Midwest (+3.3%).

In other news, Housing Starts decreased from 553K to 529K. While the media has had a field day of reporting this as bad is actually good news! The number one reason that the housing industry fell was over supply. And with supply levels still above where they need to be, any addition to those levels (for example by building even more homes) is not a good idea.

Tax Time: 5 Tips to Put More Money in Your Pocket

RISMEDIA, January 24, 2011—Taxpayers receive the most important tax form of the year in January: Form W-2, Wage and Tax Statement. Your 2010 income tax and future Social Security benefits are based on it, so its accuracy is vital to your short- and long-term financial health.

The American Payroll Association offers W-2 tips to save you time, money and headaches this tax season:

1. Increase your paycheck in 2011. The average person overpays taxes by nearly $250 a month, according to the IRS. Making minor adjustments to Form W-4 can increase your paycheck. The W-4 assistant at helps determine the withholding allowances you claim on Form W-4.

2. Don't forfeit free money. Read the back of W-2 copies B, C, and 2 to determine if you are eligible for credits. You could be missing out on thousands of dollars in tax credits.

3. Review your W-2 carefully against your final 2010 paystub. If your W-2 seems incorrect, contact your payroll department.

Important items to review:

A. Box 1 should differ from your final 2010 paystub year-to-date gross pay if you participate in a 401(k) or other employer-sponsored savings plan.
B. Box 3 total should not exceed $106,800 – the 2010 social security wage base.
C. Boxes 1, 3, and 5 should be less than your final 2010 paystub year-to-date gross pay, if you use pre-tax deductions to pay your insurance premiums or to contribute to medical or dependent care, parking, or transit flexible spending accounts.

4. Ensure your Social Security Number (SSN) matches your Social Security card. The name and SSN on your W-2 must match your Social Security card to receive your benefits. Ask the payroll department for a corrected W-2 if they do not match.

5. Make sure you get all your tax forms. You should receive a W-2 from every company that paid you in 2010 by January 31. Contact the payroll department of any company you worked for in 2010 that didn't send you a W-2. Request a 'reissued statement' to replace lost W-2s. If you earned more than $600 from a single company for any freelance or contract work, you should receive Form 1099-MISC, Miscellaneous Income, instead of a Form W-2.

Friday, January 21, 2011

Mortgage Rates Stuck in a Holding Pattern

RISMEDIA, January 21, 2011—Mortgage rates showed little movement this week, with the benchmark conforming 30-year fixed mortgage rate nosing higher to 4.95 percent according to's weekly national survey. The average 30-year fixed mortgage has an average of 0.4 discount and origination points.

The average 15-year fixed mortgage held at 4.29 percent, while the larger jumbo 30-year fixed rate fell for the third week in a row to 5.51 percent. Adjustable rate mortgages were mostly lower, with the average 5-year ARM dipping to 3.86 percent and the 7-year ARM falling to 4.19 percent.

Fixed mortgage rates have shown very little movement over the past month and are essentially unchanged since the first of the year. But the disparity between fixed and adjustable rates has grown significantly in the last six months, with fixed rates having moved higher while adjustable rates moved lower.

Some of the hybrid adjustable rate products, like the 5/1 ARM and the 7/1 ARM, now represent compelling value for borrowers that have ample equity and don't expect to be in the house more than a handful of years or so. But this strategy isn't without risk, as the rates will eventually begin annual adjustments. The inability to sell the home, or a change in circumstances, could throw a wrench into those plans. But a homeowner moving on before the first adjustment enjoys a low fixed rate without the worry of upward movements.

The last time mortgage rates were above 6 percent was Nov. 2008. At that time, the average rate was 6.33 percent, meaning a $200,000 loan would have carried a monthly payment of $1,241.86. With the average rate now 4.95 percent, the monthly payment for the same size loan would be $1,067.54, a savings of $174 per month for a homeowner refinancing now.

Tuesday, January 18, 2011

10 Ways to Make Your Kitchen New Again


Tired of the same old kitchen, but don’t want the hassle (or price tag) of an entire renovation? These fast and easy updates take the room from make-do to magnificent.

Add Table Lamps

Put table lamps on your island or dining table to make your kitchen feel like a room, not a laboratory, like designer Robert Stillin did with Visual Comfort's Column lamp in Sheffield silver for House Beautiful's Kitchen of the Year with Ina Garten.

Try a New Gadget

You don't have to invest in brand-new appliances like an industrial stove. Instead, become inspired to cook a new dish, or just have more fun cooking a family favorite, with a fun, functional gadget, like a citrus juicer. We like this one from

Add Large Baskets

If you have extra space but lack shelves, try stacking large baskets. They can hold onions, potatoes, or other items, as demonstrated here in this New Jersey kitchen designed by Lisa Cohen.

Hang Mirrors

For extra light and to make a kitchen feel more open, hang a mirror. It will reflect any natural light already present. You can even panel the cabinets, like in this Brooklyn home by designer Jonathan Berger.

Refresh Your Cabinets

An easy way to update cabinetry is by painting the insides a contrasting color, like architect Gil Schafer and his color consultant, Eve Ashcraft, did in this western Connecticut home. Next, either remove doors to create open shelves, or enjoy the pop of color through glass doors.

Plant Fresh Herbs

Instead of buying herbs at the grocery store, take a cue from this Connecticut home by designer Carole Lalli, and plant herbs in pots for your kitchen. They will add freshness to the atmosphere and your food.

Transform Your Tiles

Update the look of your backsplash — without grout — by using tile decals. These adhesive stickers come in various sizes to perfectly cover up dated tile designs, without leaving a sticky residue. We like these Mibo tile tattoos through, or try's vintage tile sticker

Mix Up Seating

Whether you have upholstered kitchen chairs or all-wood seating, a fresh and modern look is to mix up the dining area furniture. Alternate chair cushion colors, like designer Todd Klein did in this New York apartment, or if you're more bold, try using seating that's not all part of a matching set.

Switch Out Hardware

"Replace the cabinet pulls; it alone is a major transformation," says designer Jeff Lewis, who created this contemporary design for House Beautiful's 2010 Kitchen of the Year.

Suspend Pots and Pans

Instead of investing in brand-new cabinetry, try working with what you have. You can free up space by suspending your pots and pans from the ceiling. A pot rack adds style, makes them easily accessible, and creates more cabinet space for other items, says designer Shannon Bowers, who did that in this Texas home's kitchen.

Monday, January 17, 2011

Natural Curiosity: Winter Explorations for preschoolers and parents/grandparents

date: Thursday, January 20, 2011

time: 10:00 AM to 11:00 AM

venue: Broadmoor Wildlife Sanctuary

address: 280 Eliot St (Rt 16) Natick

Explore nature with your preschooler! Each day is its own adventure including animal tracks, furry creatures and much more. Together, we will explore different habitats and learn what makes winter special.

This program is designed for preschoolers with an adult companion. Suitable for children ages 3-5. Each program is limited to 8 pairs.

Sign up for one, or for all five. Thursday or Friday series available.

cost:Adult $8.50m/ $10nm, Child $8.50m/ $10nm

Saturday, January 15, 2011

Kids Ice Fishing - Jan 30th

Date: 1/30/2011
Address: Lake Whitehall, Hopkington, MA, MassWildlife Angler Education Volunteer instructors and Woodville Rod and Gun Club members will be on the ice
Location: Hopkinton, MA
Hours: 11:00 - 2:30.
Cost/Cover: There is no entry fee for this event, but for purposes of planning, equipment etc, pre-registration is required. Call 508-435-4148 or email
Contact Info: Call 508-435-4148 or email

Details: This is a great winter family activity. MassWildlife Angler Education Volunteer instructors and Woodville Rod and Gun Club members will be on the ice at Lake Whitehall assisting anyone who would like to learn about ice fishing as part of the Club's Annual Kid's Ice Fishing Derby.

Thursday, January 13, 2011

Attic Insulation Saves You Money

By: Jeanne Huber

Add attic insulation to lower heating and cooling costs by as much as $600 per year.

Do you need more attic insulation?
A good, quick way to check if you need insulation is to look across your attic floor. If the existing insulation comes up just to the tops of the joists, then you probably need to add insulation. If you can’t see the joists and the insulation is well above the tops of the joists, you’re probably okay and you won’t recoup the cost of adding more.

Types of attic insulation
Add insulation to your attic one of three ways:

Roll-on or blanket-type insulation comes as rolls of fiberglass batts, either 15 or 23 inches wide—designed to fit between the width of typical framing. If your attic already has some insulation in the attic floor, roll out the batts at right angles to insulate over the framing members.

If you’re doing the job yourself, blanket-type material is easiest to work with. Be careful not to compress it or it won’t be as effective.

Loose-fill or blown-in insulation requires a machine that shoots a stream of loose-fill cellulose over the existing attic floor framing. This is typically a job for an insulation contractor. The advantage is that loose-fill insulation does a great job of filling in small crevices and other hard-to-reach areas.

Sprayed foam polyurethane is a good choice if you plan to turn your attic into a finished room. In that case, you’ll want to insulate the roof—not the floor. Sprayed foam polyurethane molds to rafters, blocks water vapor, and has a high R-rating per inch. Expect to pay about double the per-square-foot cost of roll-on and loose-fill insulation.

How much attic insulation is enough?
To determine how much to add, look up the recommended amount for your area, then subtract the value of your existing insulation. If you don’t know, you can figure it out using the Home Energy Saver online energy audit tool.

Jeanne Huber is the author of 10 books about home improvement and writes a weekly column about home care for the Washington Post.

Tuesday, January 11, 2011

Monday, January 10, 2011

Employment Picture Brightens:

Demand for housing is fueled by consumer confidence levels. And nothing impacts those levels more than how consumers feel about the job market. We had three major releases last week that gave us a better understanding of the employment picture.

First up were the Challenger Job Cuts report. This measures the number of layoffs announced by corporations. They reported that layoffs decreased by 34% in December. Next up was the ADP Private Payroll report. They measure non-farm and non-government hiring. This report showed a gain of 297,000 jobs in December which was one of the strongest increases on record. Lastly, the Labor Department reported that the national Unemployment Rate declined from 9.8% to 9.4% which is the lowest reading in 1 1/2 years.

While we certainly still have a lot of ground to make up in the job market, the above news is good for housing and certainly mirrors last month's gains in both Existing Home Sales and Pending Home Sales.

Friday, January 7, 2011

Mass. holiday sales surge 7.6% State’s retailers outpace nation’s

By Jenn Abelson
Globe Staff / January 7, 2011

Bay State merchants rang in a huge holiday as sales surged 7.6 percent, far outpacing both the nationwide increase and the 4.3 percent jump projected by the Retailers Association of Massachusetts.

Despite a storm that dumped 18 inches of snow in Boston in late December, stores in the state reversed a three-year slide with robust revenues that almost returned to 2007 levels.

Retailers selling merchandise with higher prices, such as furniture and jewelry, had a particularly strong season. Many saw double-digit increases over last year’s revenues, according to the association, which surveyed half of its 3,100 members.

“We outpaced the nation because our economic cycle is ahead of other regions and our sales fell further in the downturn than the drops for the nation as a hole,’’ said Jon Hurst, the group’s president. “Hopefully, the consumer momentum shown in these holiday results will be sustained in 2011.’’

Merchants across the country also enjoyed a boost in spending and saw their best holiday since 2006. Revenue at stores grew 3.8 percent in Novem ber and December, compared with the same period last year, according to an index compiled by the International Council of Shopping Centers.

In Massachusetts, discounter TJX Cos., which operates retail chains such as T.J. Maxx, Marshalls, and HomeGoods, said yesterday that sales at stores open at least a year jumped 2 percent, beating the Framingham company’s expectations.

“I am extremely pleased with December’s sales results, as we significantly exceeded our plans during this important period,’’ chief executive Carol Meyrowitz said in a statement. “Our . . . growth was achieved on top of a very strong 14 percent increase last year, a much more difficult comparison than those faced by most other retailers.’’

Joseph Kelliher, co-owner of Westwood Furniture, said holiday sales were ahead 18 percent over 2009’s at his store.

“We are gratified at the results, however we also temper that with the realization that it is only as good as it was back in 2008,’’ he said. “I thought 2008 was a really lousy year until I got to 2009. In 2009, there was no consumer confidence. In 2010, it came back some. We’re hoping it continues to improve in the coming year.’’

Jim Beatty of Nauset TV & Sound in Orleans said holiday sales rose about 20 percent and revenues have returned to 2008 levels.

“In 2009, it was doom and gloom. This holiday, people’s attitudes seemed to change and they want better equipment,’’ Beatty said.

Erin Mayes of South Boston said she has been loosening her purse strings. She spent $4,000 during the holiday season — $1,000 to $2,000 more than she normally spends.

“Business has been better,’’ said the 26-year-old about her Cambridge hair salon. She said she plans to keep spending more this year as the economy improves.

Although many retailers saw higher sales, a number of major chains fell below Wall Street’s expectations, including Target Corp. and Gap Inc.

Ken Perkins, of Retail Metrics in Swampscott, said aggressive promotions in November may have pulled sales from December, and deep discounts cut into revenues.

Some retail analysts raised concerns that the shaky December performance by some merchants could signal a slowdown in the economic recovery. Consumer spending, which accounts for about 70 percent of US economic activity, is critical to the overall health of the economy.

BJ’s Wholesale Club Inc., based in Natick, reported this week that December merchandise sales at stores open at least a year rose 1.4 percent, compared with prior guidance of a 3 to 4 percent increase.

“Performance for the month of December was good, but uneven, with apparel specialty stores feeling more promotional pressures coupled with some weather issues that cut into their sales,’’ Michael P. Niemira, chief economist and director of research for International Council of Shopping Centers, said in a statement.

“While the December gain didn’t reach the high end of expectations, the increase did help make this year’s holiday spending season the strongest in recent years, which is welcome news for retailers.’’

Globe correspondent Alli Knothe contributed to this report. Jenn Abelson can be reached at

Thursday, January 6, 2011

Housing Starts Predicted to Hit 3-Year High

Housing starts will probably reach a three-year high of 739,000 in 2011, creating about 500,000 jobs and helping trim the unemployment rate to 9.1 percent, said David Crowe, chief economist for the National Association of Home Builders, in an interview with Bloomberg.

“This is an ugly economic cycle,” he said. “We need job creation to get people comfortable with buying a home. If they do that, we’ll create jobs that will reinforce that home buying and fuel additional job growth.”

Job growth in other sectors, as well as population growth, will also likely have an effect. The number of U.S. households will rise 0.7 percent to 118.7 million in 2011, the largest annual gain since the beginning of the housing crisis in 2007. Charles Lieberman, chief investment officer at Advisors Capital Management LLC in Hasbrouck Heights, N.J., expects jobs to rise by an average of 200,000 per month in 2011.

The CEO of luxury home builder Toll Brothers is optimistic. “The recovery is here to stay,” said Douglas Yearley. “I think 2011 will be an improving year, but I think 2012 will be a big year for us.”

Source: Bloomberg, Joshua Zumbrun and Kathleen M. Howley (12/28/2010)

Winter Can Be Hazardous: Tips on Preventing Home Fires

Winter Can Be Hazardous: Tips on Preventing Home Fires
RISMEDIA, January 6, 2011—The cold weather and winter conditions often bring an increase in home fires as many people use alternate heating sources such as space heaters, fireplaces, or coal or wood stoves to stay warm. Fires related to heating are the second leading cause of home fires in this country, and fixed and portable space heaters are involved in 74 percent of fire-related deaths.

As the winter months continue and people look to keep their homes warm with various heating sources, including portable heaters, the Greater NY Red Cross urges everyone to use caution when turning to these heating methods and offers the following safety tips on fire prevention:

• Keep all potential sources of fuel like paper, clothing, bedding, curtains or rugs at least three feet away from space heaters, stoves, or fireplaces.
• Portable heaters and fireplaces should never be left unattended. Turn off space heaters and make sure any embers in the fireplace are extinguished before going to bed or leaving home.
• If you must use a space heater, place it on a level, hard and nonflammable surface (such as ceramic tile floor), not on rugs or carpets or near bedding or drapes. Keep children and pets away from space heaters.
• When buying a space heater, look for models that shut off automatically if the heater falls over as another safety measure.
• Never use a cooking range or oven to heat your home.
• Keep fire in your fireplace by using a glass or metal fire screen large enough to catch sparks and rolling logs.
• Have wood and coal stoves, fireplaces, chimneys, and furnaces professionally inspected and cleaned once a year.

Wednesday, January 5, 2011

What Is a Credit Score, Anyway?

By Jeff Mandel and Marlin Brandt

RISMEDIA, January 5, 2011—If you ask your neighbor, your friends or your banker what a credit score is, you’re likely to get all kinds of answers. Which of the following is right:

-Your credit score is technically a statistical method of assessing your ability and likelihood to pay back your debt (creditworthiness).

-Credit scores are based on several different factors, including your payment history, amount of outstanding debt, length of credit history, use of new credit and types of credit used.

-Credit scores are primarily based on credit report information, which is typically sourced from credit bureaus.

-Credit scores often come from any of the three largest credit bureaus in the U.S. (Experian, Equifax and TransUnion).

-Credit scores range between 300 and 990, depending on the scoring system and algorithms used (i.e., FICO, NextGen, CE Score and VantageScore).

Before there were credit scores, human judgment was the primary factor used to evaluate a borrower’s credit worthiness and/or risk. This process was very subjective and created a lot of variability in the results. Many lenders spent an enormous amount of resources training employees on how to observe consumer credit behavior as the basis for judging risk when lending money. Not only was this a slow process, but due to human error, it was also inconsistent and unreliable.

Lending institutions have created and used credit scoring systems in various forms for around 50 years. However, it was not until the 1980s that scores were somewhat standardized using a point system that scored the primary variables found on an individual’s credit record. This newer system helped to eliminate much of the subjectivity and variability that had existed with other attempts at standardization.

However, this process was still connected to the spontaneous measurements of the consumer’s credit report and did not consider the actual payment behaviors of a consumer.

Credit scoring took a major step forward when statistical models began using combinations of credit data. These next generation computer “predictability” models were designed to include payment information from thousands of consumers and were calculated based on a complex mathematical algorithm that generates a credit score the moment a report is ordered. There are literally trillions of score combinations used in the calculations. When combined with computer applications, scoring models have made the process of granting credit extremely efficient and much more objective. Although far from perfect, these models help facilitate commerce by expediting consumers’ ability to get the credit they need in a far more efficient and effective manner than the systems previously used.

As for your answers above, if you selected all, you were right!

Jeff Mandel is president and Marlin Brandt is COO of ApprovalGUARD.

Monday, January 3, 2011

5 Questions on Driving Safely in Winter

By Cassandra Spratling

RISMEDIA, January 3, 2011—(MCT)—With cold, snow and ice come auto accidents. But there are basic steps you can take to reduce the likelihood of crashes, says the commanding officer of the Precision Driving Unit of the Michigan State Police. Here are five questions with Lt. Keith Wilson:

Q: How much should drivers slow down?
A: There is no one answer. It depends on the vehicle, the road conditions, the driver's abilities and experience. But there are factors to consider. Can my vehicle stop at any point in time if it needs to avoid something ahead? Can I make the turn I need to make? Drivers need to plan further ahead. Slowing down enables them to analyze the situation more.

Q: What else should drivers do in addition to slowing down?
A: Make sure their tires are inflated to the proper inflation level. Make sure all lights are clean and visible to oncoming as well as following traffic. Make sure wipers are in good shape and you have adequate fluid for keeping the windshield clear. Brush all snow off the windows. Don't clean just enough for your eyes to peak through. Not only is that not sufficient, but it's against the law. Keep your car clean so it is visible. Give yourself extra time to get to your destination so you're not pressed for time and you're less likely to take chances and go faster than you should. And, as always make sure your brakes are working properly.

Q: Speaking of brakes, should you pump your brakes when trying to stop on snow or ice?
A: You should know your car. If you have anti-lock brakes, you should not pump your brakes. You should hold your pedal to the floor until your vehicle stops. If you do not have anti-lock brakes, you should gently pump or modulate your brakes to slow your vehicle to a stop.

Q: Is there such a thing as going too slow in bad weather?
A: State law dictates that drivers reduce speed to adjust to weather conditions, but there is no legal limit as far as going too slow. If you are going slower than most traffic, always stay to the right, so drivers can pass on the left.

Q: What do you say to those drivers who zoom by regardless of the weather conditions?
A: It's usually those drivers who lose control and cause crashes. They are taking extra risks and putting others at risk when they're not using good judgment.

(c) 2010, Detroit Free Press.
Distributed by McClatchy-Tribune Information Services.