Fed Rate Hike
As we anticipated, the Federal Reserve (Fed) raised interest rates a quarter of a percent on Wednesday, March 15th. This is the second hike since December and a sign that the central bank plans to raise rates faster this year.
One rate hike won’t change the world but higher rates affect millions of Americans. If you have a credit card or savings account, want to buy a home or a car, and invest in stocks or bonds this could affect you.
This hike could increase the interest paid on credit cards and car loans. However, mortgage rates are not always negatively affected by a rate hike. The Fed doesn’t directly control interest rates, and as we saw late last year after the Fed hiked rates that mortgage interest rates actually went down.
Having said that, the historical average for mortgage rates is 8.25 %. It is likely that mortgage rates will continue to trend upward. So, if buying a home has been on your radar, it may be time to seriously consider moving forward.
While this hike may not sound great for most Americans, it is a signal that the U.S. economy is improving.
Credit Score Boost
In other news, the three major credit reporting agencies announced a major change in the way they handle certain consumer information. Specifically, the way they handle tax liens and judgments. They have stated they will be purging the vast majority of tax lien and judgments from consumer credit reports.
Starting July 1st, public records must now contain 3 of 4 pieces of data: name, address, date of birth or social security number. Many tax liens and judgments don’t contain the required information and will be removed.
This is really good news for consumers whose credit is being affected by a lien or judgment. With this information no longer reporting there should be a pretty good boost in credit score.
Now, keep in mind that just because this information is no longer reported, it doesn’t mean that it magically disappears. A lien or judgment is still public record and could affect a lender’s decision on a home loan approval.
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