Mortgage News and Notes

Most homeowners shopping for a mortgage loan are aware of just how important their credit score is in determining the rate and terms that they will be offered. Practically all lenders use a “tri-merged” credit report, which is one that combines the data and the scores from the three major credit bureaus: Equifax, Experian, and TransUnion. The middle score is used to underwrite the mortgage.

Fair Isaac, the company that created the FICO score, announced that it will soon implement changes to the FICO model. According to a recent article in the Wall Street Journal, those changes are expected to boost those with excellent scores and hurt those with lesser scores, thus widening the gap between consumers who are considered good credit risks and those that are not.

Among the changes are harsher treatment of late payments and rising debt levels and penalizing consumers who obtain personal unsecured loans, such as those offered by many credit card issuers. It is believed that millions of consumers could see their scores rise or fall as a result of the changes.

As to what this means for each individual looking for a mortgage, best practices for credit use have not changed much. On-time payments are the single most important factor in your score. However, these changes to the FICO model will increase the importance of other factors such as the amount of credit outstanding compared with your total available credit and, in the case of personal loans, the type and purpose of the credit obtained. Apparently there are good loans and not so good loans.

As always, the simplest advice is the best. Use your credit wisely and your score will help rather than hurt you.

Steven H Hofberg, Operations Manager

Posted by Steven Hofberg on February 10th, 2020 5:36 PM

Dear Friends,

This week, I will address those items that should be followed by everyone regardless of score. Keep in mind that credit score management is a marathon, not a sprint. Your actions will take one or more months to come to fruition; sometimes a year or more in difficult cases.


Here are four tips that everyone should follow regardless of your score:


1. Make Sure Your Credit Reports are Accurate


Most everyone has three credit reports, each one from the major credit bureaus – Experian, Equifax and Transunion. Some credit providers chose one of the three, but for mortgage credit we must have a “tri-merged” credit report, which means a combined report including information from all three bureaus. A recent study by the Federal Trade Commission found that 20% of consumers had at least one error on their report. Your credit score is based on the data in those three bureaus, so checking them for accuracy is very important. You can do that for free once a year at, the website run by the major bureaus under a mandate of the federal Fair Credit Reporting Act. Once you get the reports, check for errors in personal information (name, address, etc.), and review the list of credit accounts for accuracy. Disputes have to be filed with each bureau separately, and each individual dispute should be filed separately, meaning three disputes for each error.


2. Build a Strong Credit Age


For young people especially, having a short credit history will hinder your scores. A good average age for a credit history is five years or longer with at least three tradelines, or creditors. Someone with only a one year history will have significantly lower scores than someone with the same on-time payment record but over five years. So establish credit as soon as possible in your adult life (see the next section on getting and using a credit card).


3. Get and Use a Credit Card


Apply for and maintain at least two credit cards. Three would be better. Once you receive them, make at least one charge per month on each, and pay off the balance each month so you don’t incur interest charges. This will build your “Credit Age” as discussed above. But fair warning, if you make payments late on any card, your scores will drop substantially. Use your good credit wisely and don’t buy more than you can afford to pay off in a short period of time (ideally by the end of the month).


4. Monitor Your Credit Utilization Ratio


One of the most important factors affecting your score is your credit utilization ratio, which is the percentage of available credit that you are actually using. Try to maintain a 15% ratio, meaning that if you have a combined credit card limit of $20,000, your total credit card balances should be $3,000 or less, even if you pay off the entire balance at the end of the month. In any case, try never to exceed a 30% credit utilization ratio, or your scores will drop substantially. This is also the reason you should not close old credit accounts. Keep that available credit limit to lower your ratio, even if you rarely use the card.


Have a great week!


Steven H Hofberg

Operations Manager



Next week: More tips to improve your credit score.

Posted by Steven Hofberg on May 24th, 2018 7:10 AM

Dear Friends:


On Tuesday May 30 the Wall Street Journal reported that average credit scores for U.S. consumers reached a record high.  After the financial crisis beginning in 2008, the percentage of consumers with poor FICO scores (those deemed most risky) reached almost 26%.  According to Fair Isaac, the creator of the FICO model, as of April 2017 the share of risky FICO scores had plunged to 20%.


Several factors were cited for this substantial improvement; among them an improving economy, housing value gains, and low unemployment.  But the most important factor seems to be the passage of time.  As the Great Recession recedes in our collective rearview mirror, those consumers who experienced serious financial difficulties (delinquencies, foreclosures, bankruptcies) are now seeing those bad marks being deleted from their credit reports.  According to a report by Barclays PLC, more than six million U.S. adults will have personal bankruptcies disappear from their credit records over the next five years.  No doubt this will translate into even further credit score gains in the near future.


If you or one of your clients have not checked their credit score lately, maybe now is the time to do so.  You may be able to save substantial interest expense on your loans.


Have a great week!

Steven Hofberg
Operations Manager
Residential Mortgage Center Inc.

Posted in:Credit Scores
Posted by Steven Hofberg on June 6th, 2017 8:44 AM

Quick Credit Guide

Are you thinking about buying a home? Use this guide to boost your credit score!


Establishing Credit


·         Get one or two credit cards to grow your credit history

·         Debit cards do not count towards your score

·         Use the card/s each month

·         Pay them off each month

·         Pay on time

·         If you cannot get a credit card, get a secured card by putting money “down” on a bank card


Building Credit

·         Increase the credit limit on your cards

·         Keep track of your debt-to-credit limit ratio. You should aim for a ratio of 30%, but the lower the better. 

·         Don’t close old, paid-off debt – it looks good on your record (like getting A’s in high school)

·         Pay off disputes and then fight them (cable companies, medical bills, etc.)

·         Limit inquiries on your credit report

·         Monitor your credit – can give you all three bureaus once a year (checking one bureau every 4 months will give you an idea of how your credit score is doing).




Posted by Steven Hofberg on April 9th, 2015 1:20 PM

Dear Friends:

Some positive news from the credit reporting giants (Equifax, Experian and TransUnion) on how they will handle your credit record in the future, courtesy of the Attorney General of the State of New York.

Under an agreement announced last week with New York state, the three credit bureaus agreed to be more proactive in resolving disputes over information contained in credit reports.  Many regulators and consumer advocates have long argued that the credit report dispute resolution process is heavily stacked against consumers.

Pursuant to the new rules established by the agreement with the AG, the credit reporting firms will be required to use trained employees to review the documentation consumers submit when they believe there is an error in their credit file.  Previously, if the creditor responded to the dispute by declaring that the debt information is correct, the credit bureau would close the matter and side with the creditor.  Now, an employee of the credit bureau must look into the matter and resolve the dispute, not just take the word of the creditor.

Unpaid medical bills, a very common type of debt, will also be treated differently under the new agreement.  Credit bureaus will have to wait 180 days before adding any medical debt information to a consumer’s credit report.  The idea is to give consumers a grace period to clear up insurance discrepancies and catch up with any unpaid bills.  When medical debts are paid by an insurance company, they will have to be removed from a credit report soon after payment, as opposed to most delinquencies, which stay on credit reports for up to seven years.

Have a great week!


Steven H Hofberg

Operations Manager

Residential Mortgage Center, Inc.

Company NMLS #183787
Posted in:Credit Scores
Posted by Steven Hofberg on March 19th, 2015 1:55 PM

Dear Friends,

Do you know your credit score?

You probably don’t, and that’s okay! But having a general idea of your credit score is very important when considering refinancing or buying a home. Your credit score can be the difference between qualifying or not qualifying for a mortgage.

For those of you who aren’t as familiar with the concept of a credit score, here is a quick refresher. If you have a mortgage, installment loan (such as auto or student loans) or a credit card, you have credit. Every time you make your monthly payment on your credit accounts, they payment is reported and used to create your credit file. This file is given a score by each of the three credit bureaus: Equifax, Experian and Transunion. The score is based on your credit history: how much credit you have outstanding and how often you make payments, with late payments and too high credit ratios negatively affecting your score. When you apply for new credit, your credit file will be pulled and your credit score will be reported by the three bureaus. All credit lenders have required levels for your credit score to reach in order for them to issue you credit. The higher your credit score is, the better rates and terms you will be offered when obtaining new credit.

But how to keep track of your credit score? Federal law has mandated that you are allowed to request one free credit report every 12 months. You can go to, a website set up by the Consumer Financial Protection Bureau for you to request a copy of your credit report. This report will not feature your credit score, but it will contain the details about your use of credit on which your score is based, such as payment history, utilization, age of accounts, etc.

Working in the mortgage industry, we cannot stress enough how important it is for you to keep track of your credit. When managed responsibly, a good credit report can qualify you for the best rates and terms for a refinance or home purchase. Don’t let the house of your dreams slip through your fingers because of poor credit.

Enjoy your weekend!

Steven Rabin
Residential Mortgage Center Inc
Posted in:Credit Scores
Posted by Steven Hofberg on June 19th, 2014 11:45 AM

Note: This article is reprinted from Margie Hofberg's Newsletter dated June 20, 2011.

The cost you might end up paying for the "20% Off If You Apply For a Kohl's Charge Card Today" deal ...

This is my third installment in a series about the many new rules and requirements which borrowers and originators have to deal with in order to originate a mortgage loan.  This week I will discuss the rules applicable to "new credit."  But before I can tell you what new credit is, I have to explain "old credit."

To start with, a borrower's credit history is not static. It is dynamic -constantly changing with every monthly reporting cycle. On the other hand, a credit report is static. It is a snapshot of a credit history at one particular moment in time. Since it would be highly impractical to update a credit report every day during the application process, standard underwriting practice allows a loan to be approved based on a credit report that is no older than 90 to 120 days at the time of closing.

But ... and there is always a "But" ... What about credit inquiries? An inquiry is a "credit check," usually by a potential new creditor. A recent inquiry appearing on a credit report tells the underwriter that the borrower has been applying for credit elsewhere. The borrower will have to explain the inquiry and if it is due to an application for new credit then the loan will not be approved until the underwriter is able to confirm the terms and amount of the new credit. At the very least this will cause the closing to be delayed until the new creditor reports the account activity to the credit bureaus so it can be included in an updated credit report.

So now you are wondering what exactly does Kohl's have to do with this? Kohl's (and many other stores) will offer you a bonus if you apply for a store credit account at checkout; typically 20% off of the total amount of your purchases that day. Well, if you are in the process of obtaining a mortgage when you take them up on that 20% deal you are very likely going to delay your closing while that new credit account is verified.

So wait until after closing - then go shopping! Have a great week.

Margie Hofberg, President, Residential Mortgage Center Inc

To contact Margie Hofberg email her at If you wish to be notified when she posts her weekly Newsletter simply click on the Subscribe button below. To be added to her weekly Newsletter email distribution list email Renee Bourassa at

Posted in:Credit Scores
Posted by Steven Hofberg on June 19th, 2011 7:42 PM

This week I would like to share some information about credit that may be very important for your clients who intend to apply for a mortgage in the near future. I was recently consulted about mortgage financing by a woman who was going through a separation. She wanted to stay in the marital home and buy out her spouse. Although she had sufficient income to qualify her credit profile was not acceptable and I was unable to get her a mortgage. The reason was not bad credit; her payment history was fine. The reason was insufficient credit. It turns out that she had not used any credit in the last 5 years and therefore did not have a credit score! She told me that about 7 years ago she found herself in credit card overload. She paid all the debt off over the next 2 years and decided from then on she would only pay cash for purchases. While it is true that having a zero balance on your accounts is a positive factor, you still have to use the accounts from time to time. A credit score is based on your credit history.  No history = No score. No score = No mortgage.

Because her attorney referred her to me at the very start of her separation process, she will have time to reestablish credit and receive a credit score before the refinance becomes necessary. So her story will have a happy ending, at least as far as her financing is concerned.

Have a wonderful week.

Margie Hofberg, President, Residential Mortgage Center Inc

To contact Margie Hofberg email her at If you wish to be notified when she posts her weekly Newsletter simply click on the Subscribe button below. To be added to her weekly Newsletter email distribution list email Renee Bourassa at

Posted in:Credit Scores
Posted by Steven Hofberg on April 27th, 2011 9:21 AM


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