Lenders Require Higher Credit Scores

Wall Street Journal (09/25/07) P. D3; Mincer, JilianTurmoil in the subprime mortgage markets and the resulting credit crunch have made it extremely important for consumers to pay close attention to their credit scores. John Ventura--director of the University of Houston Law School's Texas Consumer Complaint Center--says scores in the upper 700s are necessary for borrowers to obtain optimal interest rates, whereas a score of 720 was sufficient before the problems in the subprime market erupted. A recent Consumer Federation of America and Washington Mutual Inc. report, meanwhile, shows that borrowers could cut finance charges by $76 per person per year or $20 billion total simply by hiking their credit scores by 30 points--which experts say can be achieved by making timely bill payments, keeping credit card balances low and repaying debts. Fair Isaac Corp., developer of the credit-scoring system, notes that $5,148 can be saved in a single year on a $300,000 mortgage with a fixed rate and 30-year term if borrowers increase their scores to the 660-699 range from the 580-619 segment.