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Module 2
How Credit Affects You
Credit and Loans
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Good Credit Scores and Home Buying

Higher Scores Mean Big SavingsAccording to www.myFICO.com's loan savings calculator, a higher FICO score can save you hundreds of thousands of dollars over the term of a home loan. As an example, their data shows that a 760 credit score could translate to a 6.3% APR rate on a 30-year fixed, $300,000 home loan. Using the same scenario, a score of 700 would get a 6.5% APR. A 620 score would pay more than a full percentage point and a half higher, 8.1% APR for the same sample loan. (Note: These rates and guidelines are samples only and were based on the market interest rate at the time.)

Checklist: Factors that Impact Your Credit Score edge
  • Poor payment history
  • Approaching your credit limit
  • Short credit history
  • Too many credit applications/inquiries
  • Moving debt around rather than paying it off

Example Comparison
Comparison of Interest Rates Based on Credit Scores
30-Year Fixed Rate Home Loan for $300,000

FICO Score

Annual Percentage Rate

Monthly Payment

Total Interest Paid over 30 Years

720-850 6.327 $1,862 $370,393
700-719 6.452% $1,887 $379,228
675-699 6.989% $1,994 $417,729
620-674 8.139% $2,230 $502,956
560-619 9.679% $2,562 $622,261
500-559 10.468% $2,737 $685,336
Source: http://www.myfico.com/myfico/CreditCentral/LoanRates.asp

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