Well, the always strange bedfellows of Fair Isaac, the mastermind behind the FICO score the credit reporting agencies (who are themselves made up of an odd alliance of TransUnion, Equifax and Experian) are at it again. Worse, we, as credit consumers, are all trapped in the same restaurant with little hope of escaping their quarrel. Whether the fuedin’ twosome will merely frustrate us or make us very uncomfortable remains to be seem.

The pair have always had a co-dependant, can’t-live-with-them-can’t-live-without them relationship. The credit bureaus keep a detailed record of your credit history. But the problem is, when a potential lender wants to check a client’s credit, they don’t want to filter through pages of raw data to determine if the client was a good credit risk. So to help with this, Fair Isaac developed several formulas algorithms to crunch this information and develop a numeric score to represent a person’s credit risk. The FICO score usually range from 300 to 850, the higher the number the better someone’s credit was.

While this arrangement is convenient for potential lenders, it wrangles the credit bureaus who have to pay Fair Isaac to use the bureaus’ own data and assign a number to it. The credit bureaus reasoned that it would be much easier (and a lot more profitable) if they developed their own scoring system, and weren’t forced to siphon off part of their profits to a third-party company.

Enter VantageScore, developed by the credit bureaus themselves. Like the FICO score, the new scoring system assigns a number value to your credit history. VantageScore’s scores range from 501 to 990. The score is further assigned a grade and is designed to give creditors and consumers a easy way to tell how good their credit is.

For example, a score between 990 and 901 represents an “A”, a score between 801 and 900 a “B”, a score between 701 and 800 a “C” and so on, down to a failing grade of F.

The VantageScore system is currently in the test phase and is not currently in use. But once the system goes on-line, the bureaus are hoping lenders will stop using the FICO scores and switch to VantageScore enabling them to keep their profits.

Though VantageScore was launched as a strike against Fair Isaac, it is easy to see how the duel between the two parties could catch a few consumers in the cross-fire. First consumers will have to learn a new scoring system. After 50 years of dominance, consumers understand a FICO score of 745 is a good score. But the same number with the new system isn’t so hot.

Further, while both scoring systems use similar scoring systems, differences between the two methodologies, so a consumer may have a better score on one system that an other.

What’s more, the VantageScore system promises lenders that the new system will do a better of job of rooting out bad credit risks than the FICCO system. Exactly how it does this has yet to be seen, but some financial analysts worry the tighter net for people with bad credit will also unfairly trap a those with an average or above average credit history.

But whatever happens, one thing seems clear—the duel between the co-dependant pair won’t go away soon. Currently FICO is used by 80 percent of the banks and 75 percent of the mortgage companies; the credit bureaus will no doubt be fighting hard to claim their share of the market. How uncomfortable the fight for become for consumers, the hapless bystanders, is unclear.

By David Plowman

While that may be a good option for some homeowners, others may not want to get one of these loans, either because they do not have a lot of equity in their home or because they do not want the hassle of applying for a new loan.

But that doesn’t mean a home improvement project has to be put on hold, there are several other ways of funding a renovation project.

• Cash. As with any other major purchase, paying with cash could save you a lot of money in interest and finance charges. While the option is not always viable, carefully weigh the pros and cons of financing your project versus waiting until you have saved enough money to pay with cash.
• Credit cards. If you don’t have a major project, you may be able to charge the expenses to a major credit card or an in-store charge card. Be cautious with this option however, because unless you can pay off the balance quickly, you may be charged a lot of interests. If possible, you may want to sign up for a low interest credit card and plan to pay the balance off before the interest rate spikes.
• Title I Property Improvement Loan Programs. These loans, available from most commercial lenders is insured through the Federal Housing Association (FHA) may be a favorable option for residents who do not have a lot of equity in their home. There are be some restrictions on the type of worker covered by the loan, and there strict loan limits. Check with your local bank for more information.
• IRA loans or borrowing from life insurance.  While these options sound like they are equivalent to “borrowing money from yourself” there are some very serious tax penalties to think of. Basically, these options should only be considered if all other potions have been exhausted and the work needed on your house is severe and cannot be differed until a later date.

While a home equity loan might be an option for may people looking to fund a home improvement project, it is not the only option.

By David Plowman

• Know your credit history. Any lender you work with is going to check your credit history and your credit score, so you should do the same, long before you fill out a loan application. Errors can and do happen, so should be familiar with your history and correct any errors before potential lenders look at your history.
• Know if you eligible for homebuyer programs. Most areas will offer government-sponsored first-time homebuyer programs that may offer better loans rates than you’d find elsewhere. Some programs may also offer loan options for people with damaged credit.
• Get pre-approved for a loan. There is a big difference between “pre-qualified” and “pre-approved.” A pre-qualification is a general review of your income and debts, usually based solely on information you provide the mortgage company which gives you an idea of how much of a loan you could receive. The process to be pre-approved is more complex. You will generally have to provide proof of your income and debts (in the form of tax returns, pay stubs and credit information. The potential lender will also check your credit history. If you complete this process successfully, the lender will provide a written verification that they will actually loan you the money, pending appraisal, title report and purchase contract. In almost all cases, a seller would opt to sell to someone who is pre-approved for a loan as opposed to someone who is just pre-qualified.
• Borrow what you can afford to pay back. Just because you are approved for a loan, doesn’t mean you can afford the monthly payments. Don’t opt to get the maximum loan amount you can only find every cent you make has to go back into making your mortgage payments.
• Shop around for the best rate. Just as your would shop at different retailers for different rates for similar products, lenders may offer different rates for the same loan. Check with several companies to know you are getting the best deal.(Click here for more information on shopping for a loan.)
• Know what you are getting charged for. Lenders may add a litany of fees to their loan amount. When you shop for a loan, ask about any miscellaneous fees in addition to the interest rate and any points you may have to pay.
• Budget for closing costs. It is a reserve corollary of the adage “you need money to make money.” When it comes to getting a home loan, “you need to pay money to lend money.” The day you close on your home and sign the final loan papers can be a very expensive day. You may need to pay for attorney’s fees, taxes, prepaid homeowner’s insurance, the miscellaneous lender’s fees discussed above and points. Your lender should give you a solid estimate of all the closing fees involved, but you should start a savings fund for those fees well before then.
• Keep a savings reserve. With all of the home buying charges and the monthly payments, it might seem like you are hemorrhaging money. While that may be the case, you should also make sure you have some emergency reserves. You need to be prepared if the roof on your new home suddenly springs a leak or if the air conditioning goes on the fritz. If you are already tapped out by buying the home, e such an emergency could turn into disaster.

When looking for a home mortgage, being prepared could save you time and money.By David Plowman

The podcasts featured at Stanford University in California, Calhoun Community College in Alabama and Indiana University are currently meant as a supplement to attending traditional lectures, not as a substitute. For example, if students oversleep and miss an early morning class, they will no longer have to scramble to find another student’s notes.  It will also come in handy before finals, allowing students to cram or review information that they just don’t quite grasp. Officials at Calhoun also allow students to log on to the net to view many of the visual aides professors use in class.

Calhoun officials are currently stressing the value of attending the classes in person with some professors offering “attendance incentives,” and likening the service to “a tutor in a pocket.”

But it may be just a matter of time before the tutor is upgraded to a full-time professor. In fact, Even Calhoun is investigating the feasibility of integrating the service for their distance learning students in the future.

So the next time you see someone wearing headphones, don’t assume they are jamming to their favorite tunes. They may be studying.

By David Plowman

 To help you do so, consider the following questions:

• Are you self-motivated? One of the advantages of taking on-line classes is that “classes” don’t meet at set times. While there will certainly be due dates you have to complete your work by, you won’t have set times to meet with the instructor and go over the reading material. While this may be arrangement may be great for a student who is already employed full-time and travels a lot for business, it may not be good for an easily-distracted student who procrastinates. Instead, such students may find they work better in a classroom setting with an instructor applying a thumbnail of pressure on them.
• Are you able to “speak up” when you don’t understand the material? It is a common misconception that on-line classes are for introverts who don’t want to be called on during a class discussion. But in fact, on-line learners will have to take the initiative to contact their professor if they don’t understand something. In a classroom setting,  good professors can tell whether or not their students understand the material by looking at them and seeing if they have looks of understanding or blank stares. But in the on-line environment, it is up to the student to contact the instructor (usually by phone or e-mail) if they have a question.
• Do you learn well from reading and writing? Different students learn things differently. Some read and comprehend dense texts and volumes of material. Others may be overwhelmed and need an instructor to verbally flesh out the most relevant information.

If you answered “yes” to most of the questions above, you will probably thrive in an on-line program.

By David Plowman