Most home buyers know their credit score plays a role in the mortgage application process. But just how big a role is it?
According to new data from LendingTree, just a few points’ difference could save buyers $10,000 or more in interest over the life of their loan.
Buyers with a 760 or higher, for example, pay around $207,000 in interest over the course of their mortgage. Those with a 719—largely still considered a “good” score by most lenders—would cost more than $222,000 in interest, a difference of $15,000.
When you go lower on the spectrum, into the 640 to 679 credit score range, buyers pay upwards of $237,000, while those with scores 620 to 639 pay $243,000—a whopping $36,000 more than those with “excellent” scores.
Why Credit Score Matters
According to Robert M. Barthelmess, managing partner at BGI Capital, the impact credit scores have on interest rates is undeniable.
“Undoubtedly, a high credit score is the biggest contributor to the rate you get on the loan,” Barthelmess said. “And even the smallest variance in rate can have a huge impact on what you pay during the life of the loan.”
But it’s not just interest rate that a buyer’s credit score can impact. According to Chris Lewis, manager of sales…