What’s The Damage of Lower Credit Scores?

Home Financing:  A 30-year fixed with a loan principal amount of $250,000

If your score improves to 720-850, you could save an additional $464 per month!

If your score improves to 680-719, you could save an additional $185 per month

If your score improves to 620-679, you could save an additional $102 per month

 A borrower who increases his or her credit score from 580 to 720+ can potentially save $464 per month on mortgage payments, $5,568 per year, and approximately $167,142 over the life of the 30-year loan.

Given the average American family will earn nearly $2 million dollars of the course of their careers, the cost of bad credit is a staggering 8.4% of their lifetime wages just on a mortgage!!!!!

Auto Financing:  A $20,000 car loan for 5 year term.

Why does my rate go up with a lower score….It is all in the statistics!

The graph below details a summary of the consumers “ability to pay” based on credit score.  An analysis of millions of credit files shows the delinquency patterns of the consumer within each score bracket.

So as the score decreases, the probability of a creditor getting paid back goes down.  When this happens, the creditor must charge a higher interest rate to make up for the increased delinquency.