Advertiser Disclosure
Improve Credit

How Much Money Can You Save With a Higher Credit Score?

Ismat Mangla
By
How Much Money Can You Save With a Higher Credit Score? article image.

Financial experts agree: It pays to have a good credit score. There are plenty of reasons a good credit score is beneficial, but the bottom line is the better your score, the more money you can save over time.

How exactly does it work? In most credit scoring models, a score of 700 is considered pretty good. So does it pay to increase that score to, say, 775? Or 800?

The answer depends on the credit product you're applying for. But in many cases, especially with big-ticket items, moving from one good score band to an even better one can save you beaucoup bucks.

A Higher Score Can Make a Big Difference on Your Mortgage

The higher your FICO® Score☉ , the more money you can save in interest over the life of the loan. For example, say you're planning to borrow $350,000 for your home. According to FICO's Loan Savings Calculator, with a score of 700 in the current interest rate environment (as of March 5, 2019), you could qualify for a 30-year fixed mortgage at 4.30%. Over the lifetime of the loan, you'd pay $273,834 in interest.

However, if you boosted your FICO® Score by just 60 points to 760, that would take you into the next credit scoring band. Then, you'd qualify for a 4.08% interest rate, which means you'd pay $257,515 in interest over the life of the loan. That's a savings of $16,319. Imagine what you could do with those savings if you invested that money instead of paying it to the bank.

You'll Save on Other Loans and Credit Too

For most people, a car loan is the next-biggest debt they'll take on. Now, say you have a 700 VantageScore® (another credit scoring model). That's considered "prime," according to Experian Information Solutions. Based on data from the fourth quarter of 2018, on a five-year, $20,000 auto loan, you'd qualify for a 5.01% interest rate. But if you were "superprime"—with a score of 781 or more—you could qualify for a 4.19% interest rate. That's a savings of $448 on the loan.

A higher credit score can also help you qualify for credit cards with the lowest interest rates and best terms and benefits.

Even Car Insurance Companies Consider Credit Scores

While certain states such as California, Hawaii and Massachusetts prevent car insurance companies from taking consumer credit scores into consideration when determining rates, that's not true for the majority of the country. According to Consumer Reports, insurance companies do factor data from credit reports into determining auto insurance rates. In fact, its analysis found that single drivers with "good scores paid $68 to $526 more per year, on average, than similar drivers with the best scores, depending on the state they called home."

How to Boost Your Credit Scores

The good news is that there are plenty of steps you can take to improve your credit scores, even if they're already pretty good.

The best thing you can do is to continue to pay your bills on time. You can also consider applying for new credit to increase the amount of credit available to you, thus reducing your credit utilization ratio.

Finally, you might also consider signing up for a new free tool called Experian Boost®ø. If you've been making utility and phone payments on time, Experian Boost will give you credit for this positive payment behavior, which could increase your credit score.

How Good Is Your Credit Score?

Examples: 600, 700, 780, 803
300 credit score301 credit score302 credit score303 credit score304 credit score305 credit score306 credit score307 credit score308 credit score309 credit score310 credit score311 credit score312 credit score313 credit score314 credit score315 credit score316 credit score317 credit score318 credit score319 credit score320 credit score321 credit score322 credit score323 credit score324 credit score325 credit score326 credit score327 credit score328 credit score329 credit score330 credit score331 credit score332 credit score333 credit score334 credit score335 credit score336 credit score337 credit score338 credit score339 credit score340 credit score341 credit score342 credit score343 credit score344 credit score345 credit score346 credit score347 credit score348 credit score349 credit score350 credit score351 credit score352 credit score353 credit score354 credit score355 credit score356 credit score357 credit score358 credit score359 credit score360 credit score361 credit score362 credit score363 credit score364 credit score365 credit score366 credit score367 credit score368 credit score369 credit score370 credit score371 credit score372 credit score373 credit score374 credit score375 credit score376 credit score377 credit score378 credit score379 credit score380 credit score381 credit score382 credit score383 credit score384 credit score385 credit score386 credit score387 credit score388 credit score389 credit score390 credit score391 credit score392 credit score393 credit score394 credit score395 credit score396 credit score397 credit score398 credit score399 credit score400 credit score401 credit score402 credit score403 credit score404 credit score405 credit score406 credit score407 credit score408 credit score409 credit score410 credit score411 credit score412 credit score413 credit score414 credit score415 credit score416 credit score417 credit score418 credit score419 credit score420 credit score421 credit score422 credit score423 credit score424 credit score425 credit score426 credit score427 credit score428 credit score429 credit score430 credit score431 credit score432 credit score433 credit score434 credit score435 credit score436 credit score437 credit score438 credit score439 credit score440 credit score441 credit score442 credit score443 credit score444 credit score445 credit score446 credit score447 credit score448 credit score449 credit score450 credit score451 credit score452 credit score453 credit score454 credit score455 credit score456 credit score457 credit score458 credit score459 credit score460 credit score461 credit score462 credit score463 credit score464 credit score465 credit score466 credit score467 credit score468 credit score469 credit score470 credit score471 credit score472 credit score473 credit score474 credit score475 credit score476 credit score477 credit score478 credit score479 credit score480 credit score481 credit score482 credit score483 credit score484 credit score485 credit score486 credit score487 credit score488 credit score489 credit score490 credit score491 credit score492 credit score493 credit score494 credit score495 credit score496 credit score497 credit score498 credit score499 credit score500 credit score501 credit score502 credit score503 credit score504 credit score505 credit score506 credit score507 credit score508 credit score509 credit score510 credit score511 credit score512 credit score513 credit score514 credit score515 credit score516 credit score517 credit score518 credit score519 credit score520 credit score521 credit score522 credit score523 credit score524 credit score525 credit score526 credit score527 credit score528 credit score529 credit score530 credit score531 credit score532 credit score533 credit score534 credit score535 credit score536 credit score537 credit score538 credit score539 credit score540 credit score541 credit score542 credit score543 credit score544 credit score545 credit score546 credit score547 credit score548 credit score549 credit score550 credit score551 credit score552 credit score553 credit score554 credit score555 credit score556 credit score557 credit score558 credit score559 credit score560 credit score561 credit score562 credit score563 credit score564 credit score565 credit score566 credit score567 credit score568 credit score569 credit score570 credit score571 credit score572 credit score573 credit score574 credit score575 credit score576 credit score577 credit score578 credit score579 credit score
Resources
Latest Research
Latest Reviews