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The average 30-year fixed mortgage interest rate is 7.00% today, down -0.02% compared to one week ago. The average rate for a 15-year fixed mortgage is 6.46%, which is an increase of 0.03% since last week. For a look at mortgage rate movement, see the chart below.

The Federal Reserve has been holding off on interest rate cuts because inflation has been slow to improve. While experts still expect mortgage rates to gradually move lower in the coming months, housing market predictions can always change in response to economic data, geopolitical events and more.

Today’s average mortgage rates


Today’s average mortgage rates on Jul. 04, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.

Lower mortgage rates make buying a home more affordable. Experts recommend shopping around with different mortgage lenders to find the best deal. Enter your information below to get a custom quote from one of CNET’s partner lenders.

About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.

How can I choose a mortgage term?

Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.

30-year fixed-rate mortgages

The average 30-year fixed mortgage interest rate is 7.00% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.

15-year fixed-rate mortgages

Today, the average rate for a 15-year, fixed mortgage is 6.46%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 6.66% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.

Why are mortgage rates so high right now?

At the start of the pandemic, mortgage rates were near record lows, around 3%. That all changed as inflation began to surge and the Federal Reserve kicked off a series of aggressive interest rate hikes starting in March 2022 to slow the economy, which indirectly drove up mortgage rates.

Now, more than two years later, mortgage rates are still around 7%. Over the last several months, mortgage rates have fluctuated in response to economic data and investors’ expectations as to when the Fed will start to lower rates.

Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.

Will mortgage rates drop this year?

Most experts predict mortgage rates will fall below 7% in the coming months. However, a sustained downward trend will depend on several factors, including upcoming inflation and labor data.

The Fed hasn’t hiked interest rates in almost a year, but an actual rate cut doesn’t appear imminent. Some experts say the first cut could come as early as July, though it’s more likely we see the Fed lower rates in September or November.

“If the Fed makes any moves later this year, the signal would be sufficient for the mortgage market, and mortgage rates would start falling,” said Selma Hepp, chief economist at CoreLogic. “In that case, we could see the mortgage rates around 6.5% at the year-end.”

One thing is for sure: Homebuyers won’t see lower mortgage overnight, and a return to the 2-3% mortgage rates from just a few years ago is unlikely.

Here’s a look at where some major housing authorities expect average mortgage rates to land.

Calculate your monthly mortgage payment

Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.

Where can I find the best mortgage rates?

Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.

  1. Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
  2. Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
  3. Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
  4. Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
  5. Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.

Source: cnet.com

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Learn to manage your money wisely with these straightforward tips to cut spending and budget better. Despite higher incomes, many still struggle with financial challenges and living paycheck to paycheck. Take control of your finances starting today to achieve a more feasible budget.

1. Prioritize Essential Bills and Expenses

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Identify which expenses are truly essential for your livelihood. Prioritize these over non-essential expenses like entertainment or eating out to ensure financial stability and mindful spending habits.

To learn more: What is Zero-Based Budgeting and How Does It Work?

2. Participate in a No Spend Challenge

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Joining a No Spend Challenge not only helps you save money rapidly but also increases awareness of your spending habits, leading to a minimalist lifestyle. Start with a no spend month to jumpstart your frugal living journey.

To learn more: No Spend Challenge: The #1 Fastest Way To Save Money

3. Reduce your Housing Expenses

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Housing costs can burden your budget significantly. Explore options like downsizing, negotiating rent, or getting roommates to lower expenses and free up funds for other financial goals.

To learn more: Get Paid to House Sit and Find Lucrative Housesitting Gigs Easily

4. Be Cognizant of Bad Spending Habits

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Become aware of detrimental spending habits like impulse purchases or overspending on conveniences. Break the cycle by making conscious choices and embracing mindful spending practices for long-term savings.

To learn more: 12 Things I Quit Buying to Save Money

5. Skip the Expensive Coffee Shop

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Foregoing daily coffee shop visits can yield substantial savings. Just this change alone could save you over $600 a year, demonstrating the impact of small adjustments on your budget.

To find more: 175+ Simple and Easy Frugal Living Tips to Save Money

6. Use Public Transportation to Save Money

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Opt for cost-effective alternatives to owning a car, such as public transportation, cycling, or carpooling. By reducing transportation expenses, you can allocate more funds towards savings and financial goals.

To understand further: Is a Car an Asset or Liability?

7. Take Advantage of Free or Cheap Entertainment

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Embrace free or inexpensive entertainment options to avoid draining your budget. Enjoy activities that don’t require spending money, allowing you to have fun without compromising your financial health.

To learn more: 105 Fun Things To Do With No Money

8. Cut Back on Grocery Spending

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Employ strategies like meal planning, cooking at home, and using discounts to slash grocery expenses. By being mindful of your food budget, you can save money while maintaining a nutritious diet.

To learn more: 100+ Frugal Meals for When You’re Broke or on a Budget

9. Stick to Your Shopping List

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Plan purchases in advance to resist impulse buying. Sticking to your shopping list helps you stay focused on essentials, preventing unnecessary spending and promoting responsible budget management.

10. Start Meal Planning

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Meal planning is a practical approach to budget-friendly eating. By organizing your meals ahead of time, you can minimize grocery costs and reduce food waste, ensuring efficient use of your food budget.

To learn more: Become a Pro at How to Meal Plan for a Month

11. Stockpile Goods That Will Stay Stocked Up Long Term

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Images.

Strategically stockpile essential items to save money and ensure preparedness. Focus on purchasing long-lasting goods in moderate quantities to maximize savings without cluttering your living space. Only buy what you plan to use when it is on sale!

To learn more: What is the Best Cheap Food to Buy When Broke?

12. Avoid Impulse Purchases

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By resisting impulsive buying, you create opportunities for significant savings over time. Prioritize needs over wants to safeguard your budget and maintain financial stability, especially during tight financial situations.

Find more ideas to Cut Spending

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Discover practical tips to cut spending & budget wisely. Start saving money effortlessly with these 12 straightforward strategies!

To learn more: 20+ Tips to Cut Spending when Budgeting on a Low Income

Know someone else that needs this, too? Then, please share!!

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

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Budgeting is such an adulting term.

Nothing can make you feel more like an adult when you need to learn how to budget your money, stop buying frivolous things, and save for retirement.

A budget just sounds like no fun.

Is it possible to learn how to budget money and still enjoy life?

However, the bright side to budgeting (and normally overlooked aspect) is by setting up a budget is you start to live within your means and start your path to financial freedom. Here are all the advantages of budgeting.

Personally, financial freedom is way more enticing!

So, that means a budget is necessary. A budget is key. A budget will change your life forever.

Just FYI…Here at Money Bliss, we like to call it a Cents Plan. Why? A budget sounds constricting. Take your money cents and put it with your head sense to make your Cents Plan.

We will detail what is the proper way to budget for money.

But the question remains how to budget money without pulling out your hair and still enjoy life. (It is easier than you think!)

Do you Need a Budget?

First, let’s answer this age-old debate. Do you really need a budget?

The simple answer is it depends on what you want out of life.

Do you want to live paycheck to paycheck, struggling with money, straddled with debt? Or with financial independence where you control your destiny?

Stress vs. joy. The choice is yours.

With human nature, our tendency is to spend money. While there are some savers in the room, it is typically a learned trait. Society wants quick results and with material items so cheap, it is easy to go overbudget.

Does extra income really solve someone’s money problems?

Last I checked, there are plenty of people who made millions are in bankruptcy because of overspending, not living within their means, and a budget wasn’t a term they used.

Here is a quick test…

If you have read this far into the post, then you need a budget. Keep reading. We have plenty of information to help you succeed. Also, you will learn various ways to budgeting that work for you.

Longer Answer & Must Read: Money Bliss Steps to Financial Freedom – this is the long term answer to “Do You Need a Budget?”

Purpose of a Budget

Okay, so we figured out that you need a budget. But, you aren’t truly convinced about why you need a budget.

What is the reason or main purpose of a budget?

The purpose of a budget is to first decide where you plan to spend/save money and then, see if you followed through on your plan.

Are you under budget? Are you over budget? Specifically, are you making progress to your life’s vision?

That is the role of a budget.

It is a guide for your money. Like we have said many times before you can manage your money or have your money manage you.

Personally, we use a budget to reach financial freedom faster and to make sure we have money set aside to travel. We have chosen to live a little more frugal than our neighbors (some might say much more frugal). However, the trade off for us is to travel now. Not wait until “retirement.”

For us, the purpose of a budget helps us to travel each year plus work our way towards financial freedom.

For you, what is the purpose of a budget? What do you want out of life?

Use on of these methods of budgeting as a guide to develop your budget.

Importance of Budgeting

There are many benefits of budgeting. However, most people struggle with a budget because saying no to yourself can be hard.

Let’s look at the bigger picture.

Do you want to manage your money? Or have your money manage you?

The choice is yours.

A budget is just a spending plan written out in advance.

You manage money your way!

That is a huge importance of budgeting. Personally, I would much rather decide how I want to spend my money. That is one of the biggest reasons we decided to pay off our debt in one year.

The importance of budgeting is to make sure you are living within your means and have the ability to pay for your expenses.

A budget doesn’t have to be complicated. It helps you lower big ticket expenses like housing, food, and transportation and then make sure you have enough remaining for the rest of your expenses.

If debt is a part of your life, then you are able to pay off debt faster by knowing where you spend money (and specifically what is worth spending money on). If you are debt-free, then you can continue paying in cash rather than racking up debt.

By moving towards a budget, then the foundation is laid to build a solid money journey.

You know where and how your money is spent. Then, you’re not left at the end of the month wondering if and when you will run out of money.

Another key importance of budgeting is it forces you to be organized with your finances. Then, you know where your money is going.

Creating a budget shouldn’t be overcomplicated or hard. That is something we will teach you how to do.

Benefits of Budgeting

Too many times people have good intentions of creating a budget and give up too quickly, then they never finally understand the benefits of budgeting.

It will take a few months or paycheck cycles to truly notice the benefits of budgeting (AKA spending less than you make).

You need to learn how to budget money and get into the groove of it.

No matter what we do…we can’t change how fast the days move. This is hard when you are working hard on your budget for the first time and want to see progress faster.

Consistency makes budgeting actually work.

A few of the benefits of budgeting include:

  • Stop fighting about money
  • Ability to reach your goals faster
  • Prioritize spending

Did you realize we only listed a few of the benefits of budgeting? Learn all nine Surprising Advantages of Budgeting your Money. (#7 may save your marriage)

As paychecks roll in and the months go by, you start seeing the bigger and bigger picture on the benefits of budgeting.

How to Manage Money

Now, that you read you need a budget, the purpose of a budget, the importance of budgeting plus the true benefits of budgeting, let’s learn how to manage money.

Specifically, how to manage your money.

Remember you have the choice to manage your money or have your money manage you. The choice is yours.

So, how can you manage your money?

One place to start is look at what others are doing. What makes them successful or not successful.

You can manage your money based off percentages like the Cents Plan Formula.

You can look at the household budget percentages to see how people spend money according to the statistics.

Ask a friend or family member how they manage money. (Some may tell you others won’t say a word.)

You can also go in depth with My Ultimate Money Blueprint.

Just remember, in the end, you want to manage money your way.

Steps on How to Budget Money

Managing money is more than just a budget.

It is about giving you choices in life.

These steps on learning how to budget money are very global. They aren’t specific tactics for budgeting. You can learn that in the 7 steps to making a budget. 

These is the overarching themes that guide you on how to budget your money. Let’s budget your life and change your finances.

1. Life’s Vision

Before we starting truly budgeting, we just tracked our spending. Without fail each and every month, there wasn’t money leftover to do what we wanted in life. Things just didn’t seem fair.

Then, I got this hair-brained idea to pay off all of our debt in 1 year.

Let me tell you…it was the best decision we ever made. You can read about our journey to be debt free.

By paying off our debt, we decided to put us first and what we wanted in life.

Extra money was going towards all of debt each month. So, that meant everything else was hacked to make paying off debt possible.

During that time, we truly understood what we wanted in life, what was important to us, and how we would get there. I guess you could say we began to budget our life.

Do you know what your life vision is? Your why? Your next money goal?

If not, then start here on making money goals.

2. Live Within Your Means

While this seems blatantly obvious, it is one of the hardest things for people to do.

Simply put…         

Income > Spending

Your income is greater than your spending (and hopefully savings is included in that number too).

One of the fastest ways to start living within your means is with a no spend challenge.

Plus it will help you uncover your life’s visions and what truly matters to you.

If you have been spending more than you make, then you are letting money manage you.

By living within your means, then you are managing your money your way.

Learn Exactly… How to Live Below Your Means and Love Life

3. Be Okay Being Different

The comparison trap is real.

With social media, it is hard to escape any type of comparison game. It used to be “Keep up with the Joneses’” and that just meant the neighbors and friends around you. Now, it is comparing yourself to influencers and people you will never meet in your lifetime.

The key to long term success on how to manage money is doing it your way, which means that your priorities will be different than everyone around you. And you have to be okay with being different.

Need ideas to stay on budget? Find 101 Fun Things To Do With No Money.

Need the motivation to live in a minimalist home? Could You Live In a Minimalist Home? (Real Life Minimalists) Hint: We were featured because while less is more.

4. Find a System to Work for You

The recommendation I always make when starting out with a budget is to use paper and pencil. Something tangible that you can touch and feel. Then, it becomes a constant reminder of your new ways of managing money.

Over the long-term with budgeting, you must find a system to work for you. Maybe an app? Maybe a spreadsheet? Possibly a software?

The key is finding a system that will work for you. And if you combine finances, it has to work for both of you.

This is where most people fail.

There are so many options for free and paid budgeting apps today. It may seem overwhelming. But, you can’t go back to other habits.

Today, we use Quicken and a personalized spreadsheet. Thankfully, Quicken does all of the hard work of downloading transactions, categorizing them, and creating reports.

5. Celebrate Successes

This is something that doesn’t happen as much as it should with money goals. Too many times, we are so focused on saving money and living frugally, we forget to live and enjoy life.

You need to stop and smell the roses.

In this case, you need to celebrate your wins along your journey.

Here at Money Bliss, we like to focus on…

Life. Money. Enjoy.

Life is first. You need to enjoy your life and figure out how money relates to your life. You need to budget your life.

Don’t be afraid to celebrate your success. And if you don’t believe us…One of the steps in the Money Bliss Steps to Financial Freedom is about celebrating success and doing something for you.

How to Set up a Budget

Setting up a budget shouldn’t be hard or complicated.

Don’t overanalyze. Don’t give up.

Most people have to work on setting a budget that works for them over a couple of months. Each month making small refinements.

The end goal is to set a budget that works for you.

A High-Level View of Budgeting:

  1. Determine what your money goals are
  2. Figure out your income
  3. Track how much you are spending
  4. Set up a Budget or Spending Plan
  5. Track your progress

Yes, this is a very high-level view of setting up a budget. At this point, you don’t have to divide up into budgeting categories if you don’t want to.

There are plenty of resources on our site to help you finalize a budget that works for you.

Find detailed resources on how to make a budget.

The key to setting up a budget is be realistic.

You want to set yourself up for success – not instant failure.

One of the key ingredients to make you a success is pocket money. Personally, I believe this one category can make or break your budget. Understand how pocket money (AKA slush money) works.

When setting up a budget for the first time, set aside time to work through the budgeting process. A solid budget that will work (remember that is a key ingredient for success) needs to be based on your life’s visions. Not just slapped together in 5 minutes.

Learn How to Budget Money

Learning how to budget money is completely doable.

Budgeting shouldn’t be cumbersome or overwhelming. In the long run, the benefits of budgeting outweigh living paycheck to paycheck or stressed about money.

A budget makes sure your expenses (and savings) are below your income. From there you can decide how detailed you want to get with your budget.

The purpose of a budget is to help you successfully reach your life’s visions. The point where you start managing your money and not being managed by your money.

Further resources on budgeting:

Make sure to download our free budget printables!

From all of the free and paid budgeting apps, here are our top budgeting apps to check out!

This section may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. Please read the full disclosure below.

Empower Personal Wealth, LLC (“EPW”) compensates Money Bliss  for new leads. Money Bliss  is not an investment client of Personal Capital Advisors Corporation or Empower Advisory Group, LLC.

Personal finance and money management software allows you to manage spending, create monthly budgets, track investments, retirement and more.

Save 40% off on new memberships.

Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.

Change your relationship with money!

Personal Capital is wealth management for the Internet Age. The online platform combines digital technology with highly personalized service to provide a holistic view of a unique financial picture (AKA your net worth). 

Make sure to connect all of your accounts within 7 days to set up your Personal Financial dashboard.

Tiller is the only tool that automatically updates Google Sheets and Microsoft Excel with your spending, transactions, and balances each day. 

Start your free trial.

Automate your financial plan with set-and-forget money tools that fit right into your daily life.

That’s why Qapital puts your goals front and center, then helps you plan your spending, saving, and investing around them.

Manage your money less in 5 minutes each week. Reach your money goals with confidence! The personal finance app gives you something to look forward to. 

“The easiest, most comprehensive way to both see where your money is going and plan for future expenses.”

Your automated financial assistant and budget tracker are designed to put you back in control of your money.

Stay on top of your spending, easily track bills, cancel unwanted subscriptions, and find ways to improve! 

Photo Credit:
moneybliss.org

HoneyMoney increases your awareness about your money habits. Being fully aware of your money naturally changes how you spend it.

Great way to use cash flow budgeting. Plus uses “envelopes” to budget.

Start your free trial.

Moneyspire is user-friendly personal finance and small business accounting software that brings your entire finances together in one place.

Have total control over your financial life in one click.

Know someone else that needs this, too? Then, please share!!

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

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Ready to achieve millionaire status without a cent to your name? Let’s kickstart your journey with these 15 genius strategies. Each step brings you closer to your goal, building wealth through dedication and strategic moves. It’s not just about money, but the lessons learned and connections made along the way that pave the path to financial success.

Create a Financial Plan

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Craft a financial plan that charts your path to millionaire status. It’s not just a dream but a calculated strategy based on your goals and timeframe. Establish clear objectives and a roadmap to reach financial independence.

Positive Mindset for Success

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Cultivate a positive mindset to unlock financial success. By fostering optimism and clarity, you empower yourself to manifest your aspirations with confidence. Maintain a can-do attitude to navigate challenges on the road to wealth.

To learn more: 125+ Money Affirmations to Attract More Money into Your Life

Start Saving – Even Small Amounts

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Kickstart your savings journey with small but consistent contributions. Embrace mini-saving challenges that gradually accumulate wealth without disrupting your daily life. These incremental savings lay the foundation for financial independence.

To learn more: 15 Mini Savings Challenge Printables To Save More Money

Pay Off Debts ASAP

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Prioritize debt repayment to accelerate your journey to financial freedom. Eliminating debt releases resources for wealth-building endeavors and boosts your net worth. Experience the transformative power of debt freedom on your path to millionaire status.

To learn more: How to Get Out of Debt in 5 Easy Steps

Find High Income Skills

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Discover lucrative skills to boost your earning potential. In today’s dynamic economy, capitalizing on your abilities can open doors to additional income streams. Invest in developing valuable skills that align with market demands for long-term financial success.

To learn more: Top High Income Skills Without a Degree to Learn

Grow Your Income with Side Hustles and Entrepreneurship

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Expand your earning capacity through diverse income streams. Side hustles and entrepreneurship offer flexible opportunities to leverage your talents and time, paving the way for financial abundance. Explore avenues to grow your income outside traditional employment.

To learn more: Find The Perfect Side Hustle for You

Learn Investing 101

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Master the fundamentals of investing to build wealth over time. Unlock the power of compound interest and passive income by venturing into the world of stocks and investments. Equip yourself with the knowledge and skills to navigate the financial markets effectively. Don’t delay!

To learn more: How To Invest In Stocks For Beginners: Investing Made Easy

Adopt a Growth Mindset

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Foster a growth mindset and learn from successful individuals. Embrace opportunities for personal and professional development to accelerate your wealth-building journey. Surround yourself with mentors and peers who inspire and challenge you to reach new heights.

Pick Your Community

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Surround yourself with like-minded individuals committed to financial success. Build a supportive community that encourages wealth accumulation and mutual growth. Engage with peers who share your aspirations and values to stay motivated on your path to millionaire status.

Stay Debt Free

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Maintain financial stability by avoiding debt traps. Free yourself from debt burdens to enhance your ability to save, invest, and accumulate wealth. Embrace a debt-free lifestyle that propels you toward financial independence and long-term prosperity.

To learn more: 7 Simplistic Habits Needed for Debt Free Living

Avoid Lifestyle Inflation

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Resist the temptation of lifestyle inflation to safeguard your financial future. Balance increasing income with disciplined spending habits to maximize savings and investments. By curbing lifestyle inflation, you preserve resources for wealth-building endeavors.

To learn more: Avoid the Trap of Lifestyle Creep and Reach Financial Freedom

Take Advantage of Compounding Interest

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Harness the power of compounding interest to grow your wealth exponentially. Let your investments generate returns that fuel further growth, accelerating your journey to millionaire status. Start early and leverage the magic of compounding for long-term financial success.

Focus on Your Long Term Vision

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Cultivating a long-term vision is important to know what you are striving towards. Develop a comprehensive financial plan that encompasses savings, investments, retirement, and estate planning. Stay committed to your vision and adapt your strategy as you progress towards millionaire status.

To learn more: Host a Vision Board Party: Plenty of Ideas for Success

Take Immediate Action

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Seize the moment and take proactive steps towards financial success. Avoid the pitfalls of procrastination by prioritizing saving, investing, and debt repayment. Embrace immediate action to overcome inertia and propel yourself towards your financial goals. Then, you will become a millionaire.

To learn more: How to Become a Millionaire with No Money

Know someone else that needs this, too? Then, please share!!

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

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A new report by IDIQ®, a financial intelligence company, details top consumer credit concerns provided by mortgage, real estate, and lending professionals as well as borrowers  themselves. The research included surveys of more than 100 mortgage and real estate professionals, more than 200 prospective borrowers, and a study of proprietary data of more than 20,000 IDIQ consumers with credit scores less than 700.

The report, titled “The Modern Credit Challenge: Mortgage & Real Estate Professional & Consumer Research,” highlights credit health needs from  IDIQ partners and consumer insights. The report also introduces a solution with IDIQ’s newly launched credit-building tool, CreditBuilderIQ®, based on the feedback provided.

Identifying the gap:

Non-prime credit files comprise more than 100 million consumers in the United States. This is a substantial market share of  borrowers, and regardless of  their credit profiles, their dreams of homeownership and favorable interest rates are obtainable – although increasingly challenging due to the interest rate environment, pinched consumer finances, and credit profile pressures. During the last decade there has seen a crop of fintech and analytics tools released to help consumers optimize rates and take control of their credit, but what are consumers saying?

The top-three identified concerns consumers have when it comes to their credit:

  1. Not knowing how to strengthen their credit profile
  2. Catching up on late payments
  3. Having inaccuracies on their credit report

Eighty-two percent of those surveyed noted they want to learn more about how to improve their credit scores,  and 59% said they plan to purchase a car or home in the next year. Despite an ever-increasing number of online tools, consumers still express a desire for more guidance.

Next, IDIQ analyzed proprietary data of more than 20,000 IDIQ consumers with credit scores less than 700. Some highlights:

  • 76% have at least two derogatory marks on their credit report
  • 74% have non-optimal credit utilization
  • 67% have a debt collection on their report
  • 41% have less than five tradelines in their profile

Consumers have various types of reasons that are hindering their ability to qualify for a mortgage or a favorable rate, including lack of information and guidance, poor habits, poor credit utilization, derogatory and collection accounts, and more.  Each borrower’s situation is unique and tackling each one optimally requires a personalized touch. 

As the third area in our investigative journey, IDIQ surveyed industry partners, given their alignment in solving consumer credit challenges.

As IDIQ surveyed industry partners, ranging from mortgage professionals, real estate agents, and lenders, we found the following:

  • 75% want to refer clients to DIY credit-building solutions
  • 70% want the ability to track clients’ credit progress
  • 50% wish current credit-building tools offered a consumer score plan and goals to improve scores

Tying it together:

A large percentage of borrowers are not qualifying for mortgages or optimal rates due to credit challenges. In today’s economy, these credit challenge are reaching historic highs. Despite new advances in analytics and credit offerings, consumers have not found a tool that effectively ties together various credit optimizing tools. At the same time, mortgage professionals and lenders are interested in transparent, effective, plan-based tools to help borrowers achieve the dream of home ownership. 

IDIQ commissioned this report because our mortgage, real estate, and lending partners asked for a credit management tool to educate their own clients about establishing, building, and growing their credit. At the same time, we also identified trends among our consumers that indicated those who were educated about their credit profiles were able to take proactive steps to improve their credit scores.

Because mortgage, real estate, and lending professionals as well as consumers requested a platform that offers personalized credit-building tools, we created CreditBuilderIQ. The platform offers AI-driven interactive credit analysis; personalized score factors; credit reports and scores from all three major credit bureaus; tools to resolve credit report inaccuracies; utility reporting; rental reporting (coming soon); secured card and builder loan guidance; and for business partners, the ability to set score thresholds and receive score trigger alerts.

For more information or to download “The Modern Credit Challenge: Mortgage & Real Estate Professional & Consumer Research,” visit www.creditbuilderiq.com/new-report-modern-credit-challenge-consumers.

Bryan Sullivan is the Chief Operating and Financial Officer at IDIQ.

Surya Pochareddy is the Executive Vice President, Strategy at IDIQ.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the editor responsible for this piece: [email protected]

Source: housingwire.com

Apache is functioning normally

A prime credit score typically refers to a high credit score, usually above 720. It shows lenders that you have a history of responsibly managing credit and can qualify you for better loan terms and lower interest rates.

Few numbers are as important as your credit scores. Lenders use them to determine if you qualify for auto loans, home loans, credit cards and other products. In some states, insurance companies use credit scores to calculate your premiums. You may even have to undergo a credit check to qualify for some jobs.

Whether you just got your first credit card or have more than a decade of experience managing credit, it’s important to understand the score ranges and how they’re used. Keep reading to learn more about prime credit scores in particular.

What Is a Prime Credit Score?

A prime credit score is any score that falls into the “prime” category, and according to the Consumer Financial Protection Bureau, prime scores range from 660 to 719. Some lenders may have slightly different ideas of what is classified as a prime score. Although a prime score isn’t the highest credit score you can have—credit scores generally range from 300 to 850—it’s high enough to help you qualify for many loans and credit cards.

Additional Score Categories

Prime is just one of the five categories used to classify consumer credit scores in the context of lending. The others are deep subprime, subprime, near-prime, and super-prime. Here’s what they mean:

  • Deep subprime (579 or lower): If you have a deep subprime score, banks view you as highly likely to default on your financial obligations. In other words, there’s a good chance you won’t repay loans and credit cards as agreed. With scores in the subprime category, you’ll find it difficult to qualify for credit. Even if you do qualify, you’ll pay the highest interest rates, making it more expensive to borrow money.
  • Subprime (580 to 619): Subprime scores are a little better than deep subprime scores, but you’ll still find it tough to qualify for loans and credit cards. People with subprime scores also pay higher interest rates than people with scores in the prime and super-prime categories.
  • Near-prime (620 to 659): If you have a near-prime score, you’re getting closer to qualifying for the lowest interest rates. With a little effort, you can make the leap from near-prime to prime, making it easier to reach your financial goals.
  • Super-prime (720+): If you have a score of 720 or higher, you pose the lowest amount of risk to lenders. As a result, super-prime borrowers qualify for the most favorable interest rates and loan terms.

Note that these score ranges are slightly different from the official FICO® score ranges:

  • Poor: 579 or less
  • Fair: 580 – 669
  • Good: 670 – 739
  • Very good: 740 – 799
  • Exceptional: 800+

Factors Used to Calculate Your Credit Scores

FICO scoring models use the following factors to calculate your scores.

Payment History

One of the best ways to boost your score is to make on-time payments, as payment history accounts for a whopping 35% of your FICO scores. If you borrow money, the lender expects to be repaid as agreed. A history of on-time payments shows that you follow through on your financial commitments.

Amounts Owed

Another major factor, accounting for 30% of your credit score, is the amount of available credit you are using on a regular basis. To maintain a prime credit score or super-prime credit score, avoid using a high percentage of your available credit. Maxing out your credit cards affects your utilization rate, which is a comparison of how much credit you have available versus how much you’re using.

For example, if you have balances totaling $5,000 against credit limits totaling $10,000, you have a 50% utilization rate. Lenders typically like to see utilization rates below 30%, so paying down debt and requesting credit limit increases can help you optimize your scores.

Length of Credit History

FICO’s models also consider your average age of accounts, along with the age of your oldest and newest accounts, when determining your scores. You don’t need a long history to achieve a high credit score, but it can help. This determines 15% of your credit score.

Credit Mix

The term credit mix refers to how many types of credit accounts you have. Some people have one or two credit cards, while others have a full portfolio of credit cards, personal loans, and auto loans. Credit mix doesn’t make up a huge percentage of your score (10%), but it’s one of the factors used to assess your creditworthiness.

New Credit

Every time you apply for a loan or a credit card, the lender checks your credit report. This is known as a “hard inquiry” on your report. There’s nothing wrong with an inquiry or two, but applying for multiple lines of credit in a short amount of time is a red flag for lenders. If a lender sees four or five inquiries in a matter of weeks, they may wonder if you’re running out of money and relying on credit to pay your bills. New credit accounts for 10% of your FICO credit score.

Benefits of Having Good Credit

Having a prime credit score opens many doors for borrowers. For example, you’re likely to qualify for the best interest rates, reducing the total cost of borrowing money. Lenders may also be willing to offer more favorable loan terms, such as more time to pay or reduced fees.

Good credit also gives you more freedom. If your car breaks down, a prime credit score makes it easier to qualify for a vehicle loan. Without a good score, you might have to rely on an unsafe vehicle or take out a loan with an extremely high interest rate. Prime credit scores may even help you secure lower rates on your auto insurance, homeowners insurance or renters insurance coverage.

Maintaining a Prime Credit Score

Once you have a prime credit score, it’s important to maintain it. You can maintain good scores by making on-time payments, keeping your credit utilization rate as low as possible and applying for credit only when you truly need it. Over time, these good financial habits may help you jump from a lower credit to higher credit.

Get your free credit score from Credit.com today to see where your credit currently lies and determine what you can do to maintain or improve it.

Source: credit.com