About Credit Scores....

Question: You always seem to be advising readers with poor or just OK credit on how to boost their credit scores. What if a person has no credit-card debt, no bad marks on their credit report, no other debt besides car and house, and a credit score of 769? How do I get my credit score into the 800s?

Answer: A score of 769 is extremely good. Congratulations, you obviously know how to handle credit. But to try to push your score to 800 and beyond would be sweating the small stuff. A core of 800-plus won't get you a lower rate or better terms than you can obtain with a 769, so why bother? In the words of a famous Chicagoan, forgetaboutit.

Q: My credit score hovers just below 800, and I have been trying to figure out what to do to get it over 800 simply as point of personal pride. It won't make any difference on my rates, just in how I rate myself.

A: The scoring programs are so intricate -- and somewhat different for each of the major credit depositories -- that it is impossible for me and anyone else to give this kind of advice without first seeing your score and the explanation codes that go along with it. The key lies in the explanation of why you may not have scored as well as you could. Once you see what the program has to say, go from there.

But honestly, you are really wasting your time. A credit score is based on a snapshot of your credit record on a particular day and hour. Since the information in your file changes on at least a monthly basis -- and possibly more frequently -- a small move this week could be offset by something next week.

Therefore, I say take pride in your almost 800 and leave it at that. You are one of the few, the brave, the mighty!

Q: I have been seeing a Countrywide ad on TV in which it is advertised that the borrower pays no closing costs, appraisal and other costs associated with the refinance of a home. Normally this would amount to about $4,500. Of course, this is offered through its retail branches only. Are they servicing the loan until their "costs" are recaptured? Or are they limiting this offer to someone with a 750 credit score (exaggeration intended) and then offering a client with 749 or below a different loan at a much higher rate with "some" closing costs? Smoke and mirrors or bait and switch. Either way, it seems too good to be true.

A: Many lenders offer "no cost" products to prompt homeowners to consider whether a change in their current financing makes sense. In some cases, the costs you mention -- appraisal, etc. -- are covered by charging a somewhat higher rate. In other cases, the lender requires, as you suggest, that the loan be kept in force for a certain period of time. Otherwise, a prepayment penalty is charged so that the lender can recoup all or some of the cost involved in originating the loan.

However, the big guys like Countrywide can and often do offer true "no cost" loans in the hopes that they will be able to cross-sell other, more lucrative products to new customers. In this case, no-cost loans could be considered a loss-leader to get folks in the door.

At least two other large institutions, Bank of America and Washington Mutual, also offer no-cost loans -- no origination fee, annual fee, mortgage insurance or closing fees.

Under WaMu's new Mortgage Plus product, the Seattle-based lender says it will waive more than 30 fees for the borrower, though the specific number depends on the state. It will pay closing fees, which are those associated with the loan. But mortgage taxes, transfer fees and other state and county levies are still the borrower's responsibility.

How can they do it? Either these giant lenders have volume deals with settlement providers or they have people on their staff who do the chores other lenders pay outside vendors to do.

That said, it still behooves a would-be borrower to consider several loan choices before deciding. Depending on how long a borrower plans to stay with the mortgage, it may be less expensive to pay the fees out of pocket or to roll them into the loan principal. As always, take a paper to pencil and figure out the differences.

In fact, Countrywide recently launched a broad national initiative designed to educate mortgage consumers about the fact that they have many options available to them regarding how certain costs are paid when refinancing or obtaining a home loan, no matter which mortgage lender they choose. One of their key messages is that while a no-cost loan may be right for some, it isn't necessarily the best choice for every borrower.

"People clearly understand that there will be costs when they finance a home," said Dan Hanson, managing director of Countrywide. "Home buyers look to us for information, so we've decided to recommit ourselves to educating people about the cost options that work best for their unique situations.

By presenting our customers with a menu of options, they can make an informed choice that's right for them now and into the future. The best choice in the long run isn't necessarily the one with the least out-of-pocket costs, but rather the one that brings the best total value over the life of the loan." Read about borrowers angry at Countrywide.

Nationally syndicated columnist Lew Sichelman has been covering the housing market for 35 years. Because of the volume of mail he receives, he cannot answer individual questions, nor can all questions be answered in this space. E-mail lsichelman@aol.com