How can a good score help me?
- A lower interest rate on loans and credit cards, making it cheaper to borrow money and allowing you to pay off debt faster.
- A good credit score can help you avoid putting down a utility deposit which can run in the hundreds of dollars.
- Many auto insurance companies use a credit-based auto insurance score to help decide whether to take you on as policyholder. While it is only one of many factors that go into determining your rate, having good credit can help you save money.
- Some employers want to know you are responsible and do not have burdensome debts that could affect your judgment. A company can pull your credit, with your consent, as part of an employment check. Your credit could impact your ability to get a job or receive a promotion, particularly if it requires a security clearance.
- Buying a house is the most expensive purchase you will make. Your credit score will affect the interest rate on your mortgage. A small change in the mortgage rate can make a big difference in your total cost.
Breaking Down the Savings:
|Low Credit Score Rates (Bad)||Interest||High Credit Scores (Good)||Interest|
|$3,000 Credit Card Debt @ 24% APR||$720||$3,000 Credit Card Debt @ 12% APR||$360|
|Utility Security Deposit||$100||Utility Security Deposit||$0|
|Car Insurance||$1,300||Car Insurance||$900|
|Annual Interest Mortgage Rate @ 4.5%*||$6,592||Annual Interest Mortgage Rate @ 4%*||$5,749|
*mortgage amount $147,500
Good credit is saving you $1,703
Credit Score Ranges
- Exceptional 800+
- Very Good 740 - 799
- Good 670 – 739
- Fair 580 – 669
- Poor 579 and lower
*Score ranges from FICO score 8
Improving Your Credit Score:
Now that you have a better understanding of how good credit can save you money, start practicing these good financial habits to help repair your credit score over time:
- Never miss a payment on your loans or credit cards.
- Pay down your debt to within 30 percent of your available credit limit.
- Do not close credit card accounts, even if you are not using them.
- Avoid opening multiple new credit accounts if you can.
- Clean up your credit history of any errors or inaccuracies.