Orange County Real Estate certainly has had its share of disruptions stemming from the current flood of distressed sales (i.e. short sales, foreclosures, bankruptcies, notices of default). Currently, there are 2 million distress sales on record nationwide, with another 2 million mortgages that are 90 days delinquent.

The primary reason for the trouble is that these black marks are the equivalent of dropping a bomb on your FICO score. A 750 can sink into the 500's with startling speed. Lending institutions are plenty scared of all the credit-tarnished folks. Low score equals high risk. And the last thing a bank needs is another loan default in their swelling collections. If you're one of the thousands of low score people, you'll have an easier time climbing Mt. Everest in your bare feet than you will getting a home loan. For instance, if you've done a short sale, you're facing a two year wait. A foreclosure will have you waiting it out for five to seven years. The upshot is that thousands and thousands of people are now disqualified from obtaining home loans.

Now here's the dilemma. In order to pump up our economy, two essential things must happen:
1. People absolutely, positively need to have jobs.
2. People need to buy homes.

But how can a sufficient number of people buy homes if so many have been automatically disqualified by unsatisfactory FICO scores?
Dr. Hillary has a very simple prescription for relieving this major Real Estate body ache: overhaul the FICO scoring system so that many more people qualify for home loans. This entails doing one or both of the following:

1. Lowering the optimum FICO score to a more realistic level
2. Modifying the criteria used for determining a score.

I really believe the laws of economics will force this FICO adjustment. It's inevitable. Banks don't make money unless they make loans, right? Something has to give. And if economic pressures don't shake things up, I'm fully prepared to persuade the lending institutions single-handedly.

In the meantime, many of you want an Orange County Home, and you want it now. So here are Hillary's tips for protecting your credit score and boosting your chances of securing that all-important home loan.

* If you're in escrow, don't make a credit purchase for any one item costing $2,000 or more. Such a move could really smack your credit score down.
* Don't open or close a new credit card prior to or during escrow. Again, a major credit score reducer.
* Never pay any bill late for any reason, especially during escrow.
* Never give your social security number to anyone while in escrow. The number could be used to facilitate a credit check, which in turn kicks your FICO score southward. This means, if you're car hunting, keep your social security number privileged information. No social security number equals no credit check equals no lowering of score. Get the idea?

Ever been turned down for credit? Buy something you shouldn't have? Have a credit experience you're bursting at the seams to share? Hillary wants to hear all about it. Feel free to leave an illuminating comment on my blog. I'll be happy to follow up with any help or insights that I can dig out of my creative reservoir.

You can also connect with me at 949.922.8490 or hillary@thecoastalpropertyexperts.com.