Your credit score is one of the primary items that lenders check when they consider loaning you money. A lower score means greater risk, and lenders will charge you a higher interest rate because of that difference – but how much could it cost you over the lifetime of a loan?
According to a new study from LendingTree, if you have only fair credit instead of very good credit, the difference can cost you over $45,000.
LendingTree analyzed loan data from their database to assess the costs of a lower credit score as applied to five different sources of borrowing (credit card debt, personal loans, auto loans, student loans, and mortgages). Interest was calculated based on the average loan amount for each type of credit. Combined, the loans totaled $310,263 – dominated by the average mortgage loan of $234,437.
At interest rates available with very good credit (740-799), the total interest payment over the lifetime of all five credit sources was $212,498. At t…