The Cost of a Credit Score.
The article Borrowers Unclear About Credit Scores explains the importance of a consumer’s credit score. The credit score is used as the indicator of consumer-lending risk, but most people don’t know much about them. There are three main credit bureaus: Experian, Equifax, and TransUnion; each with their own calculations for rating a credit score. The factors used in a credit score are payment history (35%), debt to available credit ratio (30%), length of credit history (15%), and applying for new credit (10%). A score generally ranges from 300 to 850 and the number matters. The article said the difference between a 580 and a 720 FICO score could mean a three-percentage-point difference in a mortgage rate, according to Fair Isaac. With a $100,000 30-year fixed mortgage, the higher interest rate would result in additional interest payments of $72,000. Check your credit report at least once a year, it is worth it.