AÂ credit scoreÂ is a numerical expression based on a statistical analysis of a person's credit files, to represent theÂ creditworthinessÂ of that person. A credit score is primarily based oncredit reportÂ information typically sourced fromÂ credit bureaus.
Lenders, such asÂ banksÂ and credit card companies, use credit scores to evaluate the potential risk posed by lending money to consumers and to mitigate losses due toÂ bad debt. Lenders use credit scores to determine who qualifies for a loan, at whatÂ interest rate, and what credit limits. Lenders also use credit scores to determine which customers are likely to bring in the most revenue. The use of credit orÂ identity scoringÂ prior to authorizing access or granting credit is an implementation of aÂ trusted system.
Credit scoring is not limited to banks. Other organizations, such as mobile phone companies, insurance companies, landlords, and government departments employ the same techniques. Credit scoring also has a lot of overlap withÂ data mining, which uses many similar techniques. These techniques combine thousands of factors but they are more or less similar or the same.
When the federal tax
code was established in 1913, all interest was deductible on personal tax
returns. But other than farmers, very few people even had a mortgage. In 1986,
Congress overhauled the tax code, eliminating the interest deduction for nearly
all consumer debt (auto, credit card, and personal loans) while lobbying from
the real estate and mortgage industries kept the mortgage interest deduction
intact for residential real estate.Â The question is back
before Congress. A recent NAR poll reported that 79% of Americans want the
mortgage deduction to stay put and real estate lobbyists say losing it would
jeopardize a still-fragile housing recovery. Those opposed say it inflates
house prices and the loss would only really impact the wealthy (only 25% of
Americans itemize their tax return, the rest take the standard deduction).
Congress took some middle ground in January, boosting the tax rate for single
filers who earn more than $400,000 and married filing jointly who earn more
than $450,000 (the top 1% of filers). Other provisions reduced the value of
mortgage interest and state incomeâ€“tax paymentsâ€“another roughly 3% of filersâ€“to
$250,000 for singles and $300,000 for married couples. For the time being,
that's the limit of the takeaway.
Currently, home buyers are much better off than they were as far back as the
1970s, considering today's home affordability and historically-low home loan
rates. If you have any questions about your personal situation, call or email