Since March of last year, the Federal Reserve has raised interest rates 11 times, which has had a significant impact on consumers who need to borrow money. Borrowing costs are at their highest in more than two decades, so if you need a loan right now, financial experts advise you to check your credit score.
“You want to make sure that your credit score is as high as it possibly can be,” said Marcus Wertz, Chief Lending Officer of Greater Nevada Credit Union. “Someone with a great credit score, say between 740-799, can pay a significantly less amount of interest for buying a car or a home.”
Bad credit scores can quadruple already high interest rates and cost hundreds of dollars over the life of a loan, therefore a solid credit score is vital in this type of lending environment, according to him.
“The best way to improve or maintain your credit score is to pay your bills on time,” he stated. “And then take advantage of free resources of receiving your credit report just to see how you’re progressing and maintaining your credit score goals.”
Some events, such as bankruptcy, might have a long-term impact on your credit score. However, a few late payments can be replaced by punctual payments in a matter of months; it’s worth keeping an eye on.
“Ideally you want to check your score monthly just to make sure of the progress and that everything is reporting correctly,” he stated. “But it could take patience, and dedication is key to improving your credit score.”
Those who need to borrow now have the option to refinance later, which can be especially advantageous with lower interest rates and a stronger credit score. And experts always advise consumers to shop around.
“Make sure you’re diligent before you make a purchase,” Wertz said. “Do your research, find out if you’re comfortable with that interest rate and what you’re purchasing that’s going to work for you whether it be for short term or long term.”
The Fed may raise interest rates again before the end of the year, depending on economic conditions.