Now that I have explained how your credit score is figured and what your credit report contains, it is time to get to the real point of why understanding credit is important: Understanding credit lets you keep more of the money you make! The following illustrations will show you the impact of your credit score on your monthly bills for two very necessary things, your car, and your house. Sample $25,000, 60-month New Car Loan Purchase






































Credit Tier

APR

Monthly Pmt

Total Interest Paid

A+

5.75%

$475

$4,327

A

6.25%

$484

$4,669

B

8.00%

$513

$5,888

C

11.25%

$547

$8,236

D

14.25%

$598

$10,498

E

17.00%

$616

$12,651
The difference in payment for the SAME car can vary as much as $141.00 a month. And this is using sample credit union rates, many finance companies out there will charge as much as 25-30% for people with the lowest credit scores. Would you rather buy this car for $29,327 or $37,651?!? House time: Sample $250,000, 30-Year First Mortgage Loan





































Credit Tier

APR

Monthly Pmt

Total Interest Paid

A+

5.75%

$1,459

$275,216

A

6.25%

$1,539

$304,145

B

6.75%

$1,622

$333,738

C

7.25%

$1,705

$363,959

D

8.50%

$1,922

$442,022

E

9.50%

$2,102

$506,768
Again, this is payments and interest for the SAME house! The payment can be as much as $643 more a month, all due to a number calculated by 3 companies who sell it to financial institutions and finance companies. The good news? You have total control over what your score is, and with the information in these articles, I hope you have a better understanding of changes you can make to ensure you have the highest score possible and save the most money. This wraps up my series on Understanding Credit. Do you have any specific questions or need clarification on anything discussed here? Leave a comment and I will respond with your answer! I also take suggestions for future article topics. ;o)

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