A recent study indicates that improving your credit score by just 70 points can qualify you for much better interest rates.
Personal loan site LendingTree showed how you could save more than $56,000 by raising your credit score from “fair” to “very good.”
Study: Raising Your Credit Scores Can Save You Thousands
LendingTree analyzed loan data, comparing “fair” (580-669) and “very good” (740-799) credit scores to gauge the difference in costs for average balances over the life of the following five types of loans:
- Credit cards
- Personal loans
- Auto loans
- Student loans
Here are some key findings from the analysis:
- Borrowers with fair credit can expect to pay nearly 100% more in interest for credit cards and two times as much for the other types of loans compared to those with very good credit.
- Most of those savings (73%) are in mortgage loans, where those with very good credit save $41,416 on average vs. those with fair credit.
Here’s a table that shows the interest paid over the lifetime of the loans:
|Debt Type||Average Loan Amount||Very Good Credit Score||Fair Credit Score||Total Cost Difference|
Clark Howard: Actively Manage Your Credit
Money expert Clark Howard says no matter how good your credit is, you have to stay on top of it.
“You never just rest on your laurels,” Clark says. “I track my credit pretty closely. If you don’t actively manage your credit and be conscious of your ratios, your scores could decline even if you pay on time every month.”
Want to make your credit scores go up? Here are some sneaky ways to raise your credit score.