Credit Score Number Crunching

Credit Cards with Cash

How big a difference does a higher credit score make, really? Let’s crunch some numbers–with help from Frank Donnelly, CFP, President of the Mortgage Bankers Association of Metropolitan Washington.

Susie and Jane each take out a $200,000 mortgage (both are 30-year, fixed-rate loans). But Susie has excellent credit and Jane only has fair credit.

Mortgage amountCredit scoreBest interest rate*Monthly payment
$200,000Susie’s score: 7403.99%$953.68
$200,000Jane’s score: 6404.75%$1,043.29


Not only does Susie pay about $90 less per month, the payoff is even higher over the life of the loan. After 30 years, Susie will have paid a total of $343,325 in principal and interest.

Poor Jane will have shelled out $375,584.

The difference: $32,259.

Just think of what you could do with all that extra cash.

 *Individual loan terms vary considerably. These interest rates assume 5% down payments with zero points. Jane will likely also have to spend considerably more on private mortgage insurance and homeowner’s insurance, according to Donnelly.

Booster shot. Why are you working to improve your credit score?