Credit Scores Have Purchasing Power

In today’s world, your credit scores have the power to impact where you live, what you drive, and how much bang for the buck your hard-earned dollars will get you. If you’re like most, the amount of your monthly payments is a big factor in determining how much car, home, or other big-ticket item you can afford to finance.  In other words, your “purchasing power”.  

What you need to know about your credit scores:

• Your credit scores are a critical factor in determining the interest rate you get from lenders.
• In turn, that interest rate determines your monthly payment amount.
• The higher your credit scores, the lower your interest rate.
• Paying less interest means you can finance more without raising your monthly payments.
  
  

Here’s how it works.

As an example, let’s say you want to buy a new car – and can afford a payment of $482 a month.  With a 608 credit score, a higher interest rate of around 13.74 percent kicks in. Because of the high interest rate, you can only afford to finance $21,000. And at the end of your 60-month loan term, you will have paid a whopping $8150 in interest alone.  With a 661 credit score, you may qualify for a lower interest rate of around 3.99 percent. Now, you can afford to finance $26,500. Meaning you can buy a nicer ride – and at the end of your 60-month loan term, you will have paid $2750 in interest, a $5400 savings.

The more you know about how to develop, maintain, and protect your credit scores, the greater your purchasing power can be.

Avoid unwanted surprises!

Before you finance a big-ticket purchase, check all three of your credit scores from TransUnion^®, Equifax^®, and Experian^®.