How Influential is Your Credit Score?
As mentioned previously, your score can affect almost every aspect of your life. I wanted to share an example of how a credit score can affect your life.
Mortgage
Several big names pop into my head when I think of mortgages. One of these names is Lending Tree. They act like a dating service for mortgages. You go to their website and they will connect you with multiple lenders that can help you with a mortgage. They have a link on their website that talks about minimum mortgage qualifications. The four requirements they have are: must have a down payment, acceptable debt ratios (we talked about this in an earlier post), a good credit score and be employed.
To understand the effects of your score on your payment here is information from www.bankrate.com about mortgage rates and credit scores. This was taken from a study done in 2007. I know that rates and qualifying credit scores have changed, but I am going to talk to you about that a little later.
If you compare a 30-year mortgage for a $300,000 home you will find a huge difference between a 500-579 score versus 760-850. Look at the difference of how much you will pay monthly and over the entire length of the loan.
The difference is over $275,000 over the life of the 30-year mortgage. I don’t know about you, but the difference of $700 per month for the same mortgage would not make me happy.
A lot has changed when it comes to credit scores and being able to get a mortgage. In 2007 you could get a mortgage with a very low credit score. They did another study in 2010 and read about how things have changed.
We could spend more time talking about all the different ways that the credit score affects your life. This is just one of the many ways that having a good credit score helps you out.
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