Impact of your FICO on $250K Loan

We just received this from our referral partner at National Credit Care

Rates fluctuate. Below you will find example rates pulled off the MYFICO website. Regardless of what rates are, these general rules typically apply. For the most part, when you’re in the low 600 credit score range, you lower your interest rate by a half-point for every 20 point increase to your credit score ($75 a month or $27,000 over the life of your loan (for a 250k loan)). Once you’re above a 660, it’s about a quarter-point per 20 score points ($37 a month) up to a 700.

$250,000 mortgage loan on a 30 year fixed loan

760-850 3.447%
700-759 3.669%
680-699 3.846%
660-679 4.060%
640-659 4.490%
620-639 5.036%

Check this fun math out, the difference between a 639 and a 700 (which really isn’t much) over the life of this loan is about $78,000 in interest. Then, add in all your auto loans, credit cards, and bank loans, who really blast you with higher interest rates over that same 30 years, and this could easily equate to $100,000 or more. Now you are looking at an additional 178K in interest over 30 years. Now look at this gem, you have a staggering $178,000 less to invest over 30 years…a massive opportunity lost (something nightmares are made of). Conservatively, you could earn $325,000 with that money over that time frame. Add that to the amount you paid in additional interest in the first place and slightly lower credit scores over just 30 years could cost you HALF OF A MILLION DOLLARS or even MORE. If you earn more than the average wage of 60K a year, after-tax, it would take you 10 years of work to make up the difference… Isn’t it worth getting your credit scores up??