For most borrowers with good to excellent credit (above a 620 FICO), there has not been too much shake-up with regards to what loan programs are available to them. However, there has been a big change in what people with sub-620 FICO scores now qualify for and have available to them. 6 months to a year ago, it was possible for just about anyone with a heartbeat and a FICO score north of 500 to get a bank loan that was not really that bad when you factored in the true credit risk of these borrowers. Clearly, this was a product of excess liquidity chasing mortgage backed securities. Well, times have changed a bit and the default rate on sub-prime loans in the very early stages has actually exceeded forecasts according to a Bloomberg article I read the other day. This means that more stingent rules for sub-prime borrowers will be coming down the pike shortly, making fewer programs available.

My best advice to people is to improve your credit scores…no matter who you are or what your scores are. There are always benefits to improving your FICO scores no matter what they currently are. I have seen lenders that give pricing benefits and options to borrowers when they hit the 820 FICO mark. FYI, the maximum FICO score is 850 and the worst is 300. Retaining your good credit and improving it is just as important as brushing your teeth every day. It is something that we all need to be dilligent about, not try for the quick-fix when we need a loan. Be pro-active not reactionary. We will be putting together a credit improvement system at Aventine that will be published on our website shortly.

[tags]Credit, FICO, Sub Prime, Loans, Financing, Bad Credit[/tags]