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Financial Literacy - Credit scores
OVERVIEW
Real savings with improved score
See the real costs or savings at these different points on the credit score scale.
Credit scoring, demystified

Good credit score saves money


How much money could you really keep in your wallet if you improved your credit score?

Even if you have good credit, relatively small shifts in your credit score can make a big difference in the rates you pay. And, what seems like a small difference in monthly payments adds up over time.

Gail MarksJarvis, author of "Saving for Retirement without Living Like a Pauper or Winning the Lottery," asks: "What if you could invest that money in a simple mutual fund that covered the entire stock market and left it until you were approaching retirement?" Historically these funds have earned on average 10 percent per year. Investing even $100 per month of money saved, thanks to a better score, over the course of 40 years adds up to over $559,500.

Use this chart to see exactly how much money you could save on a mortgage, a home equity loan and a new car if your FICO credit score was higher.

Home equity loans
Figures reflect national average rates for $30,000, 15-year home equity loan.

Credit
score
Interest
rate
Monthly
payment
Savings earned
if score was high**
740-850
8.492%
$295
0
720-739
8.792%
$301
$953
700-719
9.292%
$310
$2,562
670-699
10.067%
$324
$2,100
640-669
11.567%
$352
$10,161
620-639
12.817%
$376
$14,523

** The amount one could save over the life of the loan if credit score was 740 or higher.

Rates as of June 12, 2007, from myFICO.


 Does your credit get high marks or do you feel like
you're flunking out? Share your story.
-- Posted: June 18, 2007
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