Get Your Credit Score In Order!

Highlighted in this post are Wells Fargo (WFC - Analyst Report), Citigroup (C - Analyst Report), BankAmerica (BAC - Analyst Report), Regions (RF - Analyst Report) and Huntington Bancshares (HBAN - Analyst Report).

If Mortgages Continue to Moderate, Better Get Your Credit Score Straight

Recently, Bill Gross, co-CEO of Pimco Bond Fund, stated the he anticipates the government will take action to shore up the economy and improve the housing climate.

Government initiatives, which could be announced relatively soon, could include an additional injection of capital into the neediest of financial institutions and an expansion of the Term Asset-Backed Securities Loan Facility (TALF), which focuses on unfreezing the asset-backed  securities (ABS) market. This would potentially put commercial mortgage-backed securities back in favor to investors as an attractive investment.

Also, if the government began to be a buyer of Treasuries, this would theoretically put a cap on the 10-year Treasury rate at some point, thereby encouraging investors to take more risk. The effect should result in lower mortgage rates (perhaps 30-year fixed rate of 4.5% versus the current 5.44% exhibited on Bankrate.com), which should stimulate home-buying.

We continue to view the scenarios of the government creating a "good bank/bad bank" or "Nationalizing," a significant number of large institutions as the last line in a defense versus the first.

After the antics we described last week, with respect to Wells Fargo (WFC - Analyst Report) and others with respect to boondoggles, we continue to view the best approach to be keeping the financial institutions and to borrowers fiscally responsible for their actions.

However, if interest rates were to moderate to 4.0-4.5%, we suspect this would create opportunities for everyone. We would suspect that the current credit FICO score bogie of 750 and better would be moderated to a minimum of 700, but could go as low as 650 for a borrower. We would anticipate that at that point in time the pressures on many financial institutions such as Citigroup (C - Analyst Report), BankAmerica (BAC - Analyst Report), Regions (RF - Analyst Report) and Huntington Bancshares (HBAN - Analyst Report) would begin to moderate.

Therefore, under the above scenario, we would suggest consumers to review their current FICO credit scores from the three reporting companies TransUnion, Equifax, and Experian and work diligently to improve the scores, in order to take advantage of 30-year interest rate levels that most likely would not be realized again in our life times on homes that could viewed as at discounted prices.

We suggest that each individual take the time to review what is in his or her credit report, as the credit agencies are not incentivized to search out any incorrect information unless it is brought to their respective attentions. "Caveat emptor" -- the rating agencies, from all indications, are more interested in selling you your current FICO credit score as many times as they can.

Read the full analyst report on WFC

Read the full analyst report on RF

Read the full analyst report on HBAN

Read the full analyst report on C

Read the full analyst report on BAC

Read the full analyst report on WFC

Read the full analyst report on RF

Read the full analyst report on HBAN