RICHMOND, VA (WWBT/WXIX) - Having an excellent credit score will save you money on a mortgage or car loan, but it can also save you money on other monthly bills.
You know the higher your credit score, the better.
But let’s translate that into dollars and cents, so you can see the payoff of a strong score.
According to Bankrate research, people with credit scores between 600 and 679 have credit cards with an average interest rate of about 23%.
But if your score is between 680-739, that average rate drops to 18%, and if your credit score is north of 740, the average APR is 13%!
Your car loan will also cost more with a lower credit score. That’s because lenders know people with low scores default more often.
If someone with a credit score over 720 borrows $30,000 for a car, he might get a five-year loan at 3.4%, which means paying about $2,667 in interest over the life of that loan.
Now make that a 620 credit score. That buyer would likely only be eligible for a loan at 13.9% interest, costing $11,785 in interest. In other words, that’s a more than $9000 penalty for having a lower score.
A high credit score will also mean lower car and homeowner’s insurance premiums.
And if you have private student loans, the higher your score, the lower the interest there, too.
Pay your bills on time, and shoot for using less than 20% of your total available credit to boost your score.
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