Fha now requiring 640 fico's?? (Earth: real estate, rent, insurance)

[kiacook]

OVER half the population in Texas could no longer qualify for a mortgage

I'm not sure that's a bad thing. I think one thing we've learned from the past two years is that home ownership is not a de facto "good". In other words, more home ownership is not necessarily better. Some people are not financially able to support home ownership and it's good for a flexible economy for a good number of citizens to rent so that they can easily move when the economy shifts to where the jobs are.

[10scoachrick]

Originally Posted by FalconheadWest

At last survey, the AVERAGE credit score for the state of Texas was 635. By raising the bottom limit to 640, OVER half the population in Texas could no longer qualify for a mortgage. Texas is a huge state and we're going to lose a lot of potential home buyers if they implement it.

A little care should be taken citing those stats, my friend. Unless there is a statistical 'coincidence', the average doesn't mean half below/half above, population-wise. It means the scores average 635, not that half the population is below that number(and above that number).

"There are lies, there are damned lies...and then there are statistics!"
Paraphrased from the quote of a person much wittier than I.

[HappyTexan]

median is the middle number. Average is the sum/total which is not necessarily the middle.

[SickOfCalifornia]

Originally Posted by FalconheadWest

At last survey, the AVERAGE credit score for the state of Texas was 635. By raising the bottom limit to 640, OVER half the population in Texas could no longer qualify for a mortgage. Texas is a huge state and we're going to lose a lot of potential home buyers if they implement it.

Good!

Frankly, if you can't manage your finances enough to get a 635, you probably are not financially ready to take on home ownership and all the associated costs of home ownership.

The big reason our country is in the mess has less to do with risky Wall Street investments and more to do with people buying homes who could not afford them.

A major factor in determining your credit score is how much of your available credit is being used. Pay down your credit cards and loans and you will see your credit score rise rapidly. Pay off your cc's and loans in full and a 700+ is almost a given. And if you can't afford to pay down your credit cards and loans to do this, then the last thing you should be thinking of doing is taking on more debt in the form of a mortgage.

[FalconheadWest]

I see your point that it doesn't necessarily mean "half", but in generalities it does. If it's an average, with numbers that are in a small range of 350 up to 850, it would be roughly half have higher and half have lower. If there was a wide range like 0-1000 or even wider, it definitely wouldn't be half. Smaller ranges, less likely for it to not be very close to a half split with the wide number of people being accounted for. It's probably not true in smaller states.

[verybadgnome]

Originally Posted by FalconheadWest

I see your point that it doesn't necessarily mean "half", but in generalities it does. If it's an average, with numbers that are in a small range of 350 up to 850, it would be roughly half have higher and half have lower. If there was a wide range like 0-1000 or even wider, it definitely wouldn't be half. Smaller ranges, less likely for it to not be very close to a half split with the wide number of people being accounted for. It's probably not true in smaller states.

No 10scochrick is right. Your kind of approach works okay if there is something like a bell curve but many datasets are not like this and are very skewed to the lower or upper ends. E.G. the are a lot more people earning less than $10k/year but the few billionaires out there drive up average incomes leaving median incomes lagging far behind. You have to look at both median and average to get a complete picture.

[trayanh]

I think Falcohead is correct and probably even worse. Most of statistical distributions kinda follow Gaussion function. When the sample set is big enough, average also means expectation, which means 95% of the people will be within 635 plus minus a certain variance. Basically, more than half are below 640. Considering the bank always only takes the lower credit score if a couple apply for loan jointly, the situation will be even worse.

Originally Posted by verybadgnome

No 10scochrick is right. Your kind of approach works okay if there is something like a bell curve but many datasets are not like this and are very skewed to the lower or upper ends. E.G. the are a lot more people earning less than $10k/year but the few billionaires out there drive up average incomes leaving median incomes lagging far behind. You have to look at both median and average to get a complete picture.

[trayanh]

No, there is no "let them eat cake", but "give me your cake, or you will be dead meat" They need money badly. It is true that they could have more than enough money after a few months, but at that time, they need it. I heard "xxxx bank is too big to fail" from TV all the time. It is like you will have a million-dollar job after 2 months, but what about the 2 months before you get your pay check?

Originally Posted by ROY DUBOSE

i don't think there is a "let 'em eat cake" attitude in this country --

[achtungpv]

Originally Posted by SickOfCalifornia

Good!

Frankly, if you can't manage your finances enough to get a 635, you probably are not financially ready to take on home ownership and all the associated costs of home ownership.

The big reason our country is in the mess has less to do with risky Wall Street investments and more to do with people buying homes who could not afford them.

A big part of the housing price boom was because mortgages became too easy to get. If you were still required to put 20% down, the average house price in Austin would probably be closer to $120K.

[eileenkeeney]

If foreclosures are an issue, than raising the required credit score makes complete logical sense to me.

I bet there is a strong correlation between those who default on loans, and those on the low end of the acceptable credit scores (based on what was accepted at the time they got their loan).