Don't let your Credit Score Cost you

Most people assume that credit is an all or nothing deal. Either your score is good enough to get you approved for the new sofa, car, or home you're financing, or it's not. But that's not the whole truth. How good your score is can make a difference in the total cost of many things.


The FICO® guidelines for a credit score range:

  • Excellent credit: 800+

  • Very good: 740 to 799

  • Good: 670 to 739

  • Fair: 580 to 669

  • Poor: 300 to 579


  1. Insurance - When you're comparing insurance prices the agents will ask for your social security number in order to run your creditworthiness. The score they find will be part of what dictates your rates for homeowners, renters, and/or auto insurance policies.

  2. Credit Cards - Credit card companies will use your score to determine the interest rate you pay for your charges. For example, a person with good credit may pay an APR of 12% while a person with a lower score may pay 18% making their purchases cost more in the long run.

  3. Mortgages - Like Credit Cards and Auto Loans, your FICO score will impact the interest rate offered on your home loan. You may be forced to pay for points off of your rate or pay higher interest for the length of your loan.

  4. Auto Loans - Your credit score will decide the interest rate for auto loans. Below are examples of how a below-average credit score can add to your payments and cost you over one year.

Credit Score Rate Payment Added Cost

Excellent 720-850 5.30% $753 $0

700-719 6.83% $770 $612

Moderate 675-699 8.78% $792 $1,404

620-674 12.36% $835 $2,952

Bad 560-559 18.20% $906 $5,508

500-559 19.23% $919 $5,976


The total cost of bad credit can be thousands of dollars each year in premiums and interest payments. Visit annualcreditreport.com to get a free credit report and know where you stand. Check back for posts on what lowers your credit score and how to improve it.

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