Low Credit Score VS High Credit Score
A credit score is a number generated by a mathematical formula that predicts creditworthiness.
Credit scores range from 300-850. The higher your score is, the more likely you are to get a loan. The lower your score is, the less likely you are to get a loan. If you have a low credit score and manage to get approved for credit, your interest rate will be much higher than someone who had a good credit score and borrowed money.
Therefore, having a high credit score can save many thousands of dollars over the life of your mortgage, auto loan, or credit card.
Your monthly loan and credit card payments can easily be 40% higher with a low score! A higher credit score can save you an enormous amount of money by qualifying you for a lower mortgage interest rate.
According to Fair Isaac (at the time of this writing), lenders would probably demand a 5.5% percent interest rate on a $300,000, 30-year fixed mortgage for a borrower with a credit score between 500 and 579. That’s a $1,700 monthly payment for principal and interest. But a score above 760 would qualify you for about a 3.3 percent rate with a monthly cost of $1,300. That’s savings of $500 each month and more than $100,000 over the life of the loan!
Plus, auto loans to people with low credit scores are predatory, causing some to pay almost double the price of the can before the loan can be satisfied!