How Your Credit Score Affects Your Interest Rates?
There is a mathematical formula that is generated to calculate your three-digit number, known as the FICO score. This score helps financial institutions decide whether they would like to do business with you or not. If you seem to be at a risk, credit card companies, banks and any loan institute has the right to decline you. That means that if you have a high score, you’ll most likely be approved with them. Different credit scores come with different interest rates, so if you have over the magic number of 720-you would pay as little as 5.6% interest rate which is based on a $200,000 loan at 30 years. At the same time, there would be no additional cost to you while a score below 600 would add an additional $287,200 cost. So, if you do not have a perfect score, it’s okay. You can always improve your credit to work towards a lower interest rate.