CHARLOTTE, NC – Rising mortgage rates are getting a lot of attention these days.
But with the Federal Reserve raising rates to fight inflation, higher rates weigh even if you’re not buying a house.
Do you have a revolving credit card balance? Thinking of buying a new or used car? Or are you hoping to take out a college loan soon? Be prepared to pay more to repay that money.
30-year mortgages now exceed 5% (and can be as high as 5.5% in some areas), which can add $500 per month to a 350,000 home.
Federal student loans are now 3.73%, down from 2.75% in 2020.
How a bad credit score will make things even worse
But from the record that doesn’t stink, how bad credit can really hurt you these days,
Let’s say you buy a car. Your rate can vary from 4% with an excellent credit score – above 600 – up to 17% if you have bad credit.
And a 17% car loan will add thousands of dollars to the cost of that car.
Mortgages and other loans carry similar penalties for low credit scores.
things you can do
If you’re house hunting and missed a lower rate last month, you should inquire about an adjustable rate, or ARM, which is usually a point or two lower than the fixed rate.
Just be aware that it usually readjusts higher in 3-5 years, so it might only be a good idea if you think you’ll be moving in a few years.
Now is the time to try to increase your credit score, to get the lowest possible rates.
Bankrate suggests consolidating high-interest credit cards with a balance transfer to a low-interest card.
You can also improve your score by paying off your credit cards and making sure you don’t fall behind on loan payments in the future.