By JLP | August 25, 2009
Check out this graphic I found on the myFICO website:
I took the information found in that chart and made another graphic showing just how much interest a person would pay over a 30-year mortgage depending on their credit score:
As you can see, the difference is significant. Just moving from the second highest to the highest FICO Score ranges saves you nearly $10,000 in interest over 30 years (even more if you factor in growth on the $27 per month payment difference). The difference from the lowest to the highest ranges, is nearly $100,000 in interest expense over 30 years (or nearly $200 per month)!
My advice to anyone looking to finance a purchase is to first GET A HANDLE ON YOUR FICO SCORE! The $16 spent to find out your score is an investment—especially if you have no idea what your FICO score is. The information provided to you by myFICO is easy to understand. They also show you areas that are hurting your score and things you can do to improve it.
Then take the time and effort to improve your score. Remember the two most important areas of your FICO score are:
• How timely you are with your payments, and
• How much you owe compared with your total available credit.
I would keep those in mind, along with the other items that go into calculating your credit score (found here) if a major purchase in your future.