NEW YORK – A higher credit score could mean thousands of dollars in savings on a mortgage, according to a new study from LendingTree that compares very good credit scores to fair ones. A fair credit score is considered to be one in the range of 580 to 669, while a very good credit score ranges from 740 to 799.
The average borrower with a fair credit score will pay about $261,076 in total interest over the lifetime of their mortgage. On the other hand, a borrower with a very good score will pay $219,660 – a $41,416 difference.
When LendingTree broke down the most common type of debts – credit cards, student loans, auto and more – mortgages occupied the highest in interest paid by a borrower by far.
LendingTree says that raising a credit score actually isn’t that difficult to do. A consumer can notice changes quickly too – even “substantial changes in a matter of days or weeks for things like paying down credit or debt,” researchers note. “Those who plan to take out a mortgage or other loan type should refrain from opening new credit accounts, as credit checks and young accounts can lower your credit rating.”
Credit monitoring can help identify what is having the biggest impact on your credit. Also, other steps to help improve a credit score:
- Pay bills on time
- Keep balances low or, better yet, payoff credit card debt completely
- Don’t close unused cards
- Keep your debt-to-income ratio low
Source: “Raising a ‘Fair’ Credit Score to ‘Very Good’ Could Save Over $56,000,” LendingTree (Jan. 7, 2020)
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