How Interest Rates Fluctuate with Your FICO Score

Below you will find examples of interest rates pulled off the MYFICO website.
Regardless of what current rates are, the following rules typically apply to the relationship between your FICO Score and the Interest Rate available on your loan.

  • For the most part, when you’re in the low 600 credit score range, you lower your interest rate by a half point for every 20 point increase to your credit score.
    –   $75 a month or $27,000 over the life of your loan (for a 250k loan).
  • Once you’re above a 660, it’s about a quarter point per 20 score points.
    –   $37 a month up to a 700.

$250,000 mortgage loan on a 30 year fixed loan

760-850 3.447%
700-759 3.669%
680-699 3.846%
660-679 4.060%
640-659 4.490%
620-639 5.036%

The Table below shows how much your credit score can cost or save you.  For example, the difference between a 639 and a 700 (which really isn’t much) over the life of this loan is about $72,500 in interest.

30 Year Fixed – Loan Amount – $250,000

Credit Score Interest Rate Interest Paid – Life of Loan Interest Paid as a % of the Loan
620 5.036% $235,121 94.05%
660 4.060% $182,793 73.12%
700 3.669% $162,678 65.07%
760 3.447% $151,482 60.59%

Then, add in all your auto loans, credit cards and bank loans that also have higher interest rates (over that same 30 years) and this could easily equate to $100,000 or more in higher interest paid. Now you are looking at an additional $178,000 in interest over the next 30 years.

Imagine that you have a staggering $178,000 less to invest over 30 years...a massive opportunity lost because of a low FICO Score.

Conservatively, you could earn $325,000 with that money over that time frame. Add that to the amount you paid in additional interest in the first place and slightly lower credit scores over just 30 years could cost you HALF OF A MILLION DOLLARS or  MORE. If you earn more than the average wage of 60K a year, after taxes, it would take you 10 years of work to make up the difference… Isn’t it worth getting your credit scores up?

Information Presented By

Chuck Moulin

Chuck Moulin * Loan Officer

First Lending Solutions

6370 Magnolia Avenue, Suite 350    

Riverside CA 92506
Office: (951) 684-3307

Cell:     (951) 501-9373

Fax:      (951) 698-7901

CalBRE No. 10943933 * NMLS I.D. 1162897