If you’re reading this, we hope that you already know just how important your credit score is. To review, your credit score is somewhat of your financial lifeblood, and those three little digits can tell creditors if you’re an at-risk borrower, whether or not you should even be eligible for a loan and what interest rate you should pay on said loan (should you be eligible for a one). Generally speaking, the better your credit score, the lower the interest rate – and the other way around.
So, yes it is important – and in 2017, it’s arguably going to be more important than ever. Why? Because the Government Reserve Board elected to increase the benchmark federal funds rate. We explain:
You’re probably wondering just what impact the raising of the standard federal resources amount has on the value of your credit score. Consider this: the aforementioned amount, essentially, is the determining factor in how high of an interest amount banks and financial entities have to pay to borrow from each other. When the benchmark federal resources amount improve, so does the minimum interest rate, or primary amount, that lenders will charge even their most exceptional customers.
Since the best amount is likely to go up, so will interest rates in general, even if your credit ranking is exceptional. This means that new financial loans are likely to be more expensive, as will any existing financial loans with variable rate financing. Those who will be particularly hard hit are individuals with bad credit, as financial loans and credit cards may become more difficult to attain (not to mention the likelihood of even higher interest rates for at-risk borrowers).
The Federal Reserve Board has elected to increase the benchmark federal resources – and the board is likely to approve further improves in the future, hence why you’re rating and score is so significant as we begin 2017. So if it is less than stellar, start making efforts now to improve it. Some common credit repair practices include committing to bill paying on time, lowering your debt-to-credit ratio and, perhaps easiest of all, checking your credit file at least once a year to make sure its accuracy related to your consumer behavior.
With the resources increase, interest rates are likely to surge in general, for those with both good and a credit score. Make the commitment now to elevate your ranking so that you can make sure you’re paying the least amount possible on any credit cards.