This week, see how Americans' credit scores have improved, understand last week's drop in the prime interest rate, and learn the tried-and-true way to build wealth.
FICO, the company that develops the credit score used by lenders, reported that the average national credit score is 706, the highest it has been in ten years. Credit scores have risen not only because of a strong economy and low unemployment, but because more Americans are educated about using credit wisely. (That makes all of us at Hanscom FCU happy, but especially our Partner Relations team out there teaching our members good credit habits!) It's also important to note that factors like civil judgments and tax liens are not always included on credit reports, thanks to consumer-friendly reforms enacted by Experian, Equifax, and TransUnion, the three major credit bureaus. This contributes to the credit score upswing.
Use This News: Check your credit score, especially if you haven't in awhile, or if you're thinking about getting preapproved for a mortgage or buying a new car. Hanscom FCU members can get their score, along with their credit report, for free, and meet with a representative to discuss ways to get their scores in tip-top shape before applying for loans or even just to reduce debt.
You can get your free credit report once a year by law, but remember: this report won't show your credit score, and websites that offer free credit scores are giving you estimated FICO scores, not the scores a credit union or bank use for lending.
Last week the Fed lowered the federal funds interest rate by a quarter of a point, which in turn lowered the prime rate from 5.25% to 5.00%. (The federal funds rate is the interest rate financial institutions charge each other for short-term lending; the prime rate is the rate financial institutions offer their most credit-worthy customers, such as big investors and major institutions.) Why the rate cut? Experts say it's in response to certain indicators weakening the economy and trade jitters with China.
Use This News: If you have a home equity loan or credit card tied to the prime rate, you'll find that you'll be paying a little less in interest thanks to this most recent rate cut. On the other hand, when the prime rate goes down, you may earn less on your savings. This could be a good time to lock in the outstanding rate we're offering on our CU Thrive automated savings account.
Want to build your wealth? The U.S. News & World Report offers solid advice you've probably heard before but it's worth hearing again. You and I may never have the wealth of Warren Buffett, but that shouldn't stop us from making solid financial decisions. It's not always how much you make, but how much you save (and invest) that determines wealth.
Use This News: Start by getting a grip on your budget. If you feel like you don't have enough at the end of the week to save, take a look at your checking and credit card statements for those sneaky expenses that eat away at good intentions. (Check out our free My Money Manager personal financial manager tool to get started.)
Last week my co-worker and I talked about this and both discovered we were paying for a subscription service we didn't use anymore. I went home and canceled it, along with another service, and upped my automated investment deposit by $25 each month. That's an extra $300 a year that'll be earning money for me. Watch out, Warren!
Become a better credit card consumer. Being credit savvy makes financial sense. Download the the free guide to choosing a credit card that works for you.
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