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Fico Scores
by: Finance Mama
When you apply for credit – whether for a credit card, a car loan, or a mortgage – lenders want to know what risk they’d take by loaning money to you. The FICO score defines your risk level.

FICO scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus – Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time.

Taking steps to improve your FICO scores can help you qualify for better rates from lenders. Savings Example The higher your FICO® scores, you the less you pay to buy on credit – no matter whether you’re getting a home loan, cell phone, a car loan, or signing up for credit cards. For example, on a $216,000 30-year, fixed-rate mortgage:

If your FICO® score is Your interest rate is ...and your monthly payment is Actual National Interest Rates - Updated Daily

760 - 850 6.31% $1,338

700 - 759 6.53% $1,369

680 - 699 6.7% $1,394

660 - 679 6.92% $1,425

640 - 659 7.35% $1,488

620 - 639 7.89% $1,569

As you can see in the example above using today’s national rates, a person with FICO scores of 760 or better will pay $231 less per month for a $216,000 30-year, fixed-rate mortgage than a person with FICO scores below 620 – THAT’S A SAVINGS OF NEARLY $2,772 A YEAR. You can see that it pays – literally – to improve your FICO scores. Source: MyFico.com