ATLANTA, Ga. - What's in a credit score? Well, it depends on what number you have. The higher the number the more money you can save in the long run. There is a real world difference in a poor, fair, good and excellent score.
It's the difference in being able to afford a certain home or car, or not. It's the difference in getting denied an apartment because you have a bad credit history or getting the nice one with the view. A lousy credit score and you might not get a certain job. FICO credit scores range from 300-850. The higher the better.
But here's the breakdown, according to Experian, a credit reporting agency. If you have a credit score between 300-579, that's terrible. Sixteen percent of us are in the "very poor" zone. And if so, you are eligible for very little, if any, credit. 580-669 is considered "fair," according to Experian. This is where you find 17 percent of us. Now look here: This is getting better 670-739. But the largest chunk, which is great, is considered "very good" with the range going up to 799. And finally, give yourself a hand if you are "exceptional" and land somewhere between 800-850.
But what does it matter? A lot, a whole lot, when you need to borrow money. Well, let's consider a 36-month car loan. You borrowed $15,000. Here is the difference in what you will pay. myfico.com has a calculator that will help you do this.
Look at that top one - the exceptional score. You will get a 4.4 percent interest rate. Your car payment is $446 a month. And the interest you will pay on that loan is $1,049. Let's drop the FICO score a bit. Your rate goes up. Your payment rises as does your interest paid. Now, let's drop down to the poorer score. Look how that interest rate jumped to 14.5 percent. And the interest you will pay on the same loan is $3,595. That's a big difference.
HOW CREDIT IMPACTS LOANS
score rate payment interest paid
720-850 4.4% $446 $1,049
660-689 7.4% $466 $1,791
500-589 14.5% $517 $3,595
Get that score up by paying your bills on time and keeping your credit-to-debt ratio to 30 percent.