Honest question...what's the real benefit of a high credit score?

I’m looking into getting a new car and planning to finance about half of it. I used an online calculator to test different payment options, like changing down payment or loan length, and it asked for my credit score. Mine’s over 800, so I put that in, but it didn’t change the payment amount. It only went up when I switched to 720, and even then, it was only about a $20 difference per month.

So I’m wondering, what’s the point of keeping an ‘excellent’ credit score if it doesn’t seem to make much difference above 720? Over the years, my credit card interest went from 8% to 24%, and I always pay in full, never late. Is there any real benefit to a high score for regular people?

They throw a party every month if you’re over 800! Used to be free drinks, but now it’s just soda because of regulations.

But seriously, you get better rates on loans, and that’s about it.

Florence said:
They throw a party every month if you’re over 800! Used to be free drinks, but now it’s just soda because of regulations.

But seriously, you get better rates on loans, and that’s about it.

That’s pretty much it.

A 1% difference on a home loan can mean tens of thousands in interest over the loan term.

For a car, an extra $20 a month adds up over time. Good credit allows things like financing a phone at 0% over three years, while lower scores often mean paying high credit card rates or extra fees.

@Andi
>A 1% difference on a home loan can be huge

For example, a $400k house with 20% down—the difference between a 7.5% loan and an 8.5% loan adds up to over $80,000 more in payments.

Ella said:
@Andi
>A 1% difference on a home loan can be huge

For example, a $400k house with 20% down—the difference between a 7.5% loan and an 8.5% loan adds up to over $80,000 more in payments.

Seeing that as basically a whole down payment again is kind of crazy.

We got stuck home-buying at 3.8% instead of 3.5%, which felt bad at the time. Now 8% is considered a decent rate—it’s wild.

@Andi
Saw a bank’s sign bragging about their ‘low’ home interest rate at 7.9%! Back when my dad refinanced, he got 1.8% and was so proud. Now they add like 6% on top of that, it’s mind-boggling.

Valentina said:
@Andi
Saw a bank’s sign bragging about their ‘low’ home interest rate at 7.9%! Back when my dad refinanced, he got 1.8% and was so proud. Now they add like 6% on top of that, it’s mind-boggling.

Yep, like on a $200,000 loan—at 3.5%, the payment is $932. At 8%, it’s $1,468.

You end up paying so much more over time, and with home prices staying high, folks probably hope to refinance later. But, with values stalling, many might end up unable to refinance due to lack of equity.

@Andi
>When rates go down, prices usually go up

But it’s been weird lately. Rates went up, yet prices held high. Used car and home prices haven’t really dropped like expected.

Anna said:
@Andi
>When rates go down, prices usually go up

But it’s been weird lately. Rates went up, yet prices held high. Used car and home prices haven’t really dropped like expected.

Yep, rates have climbed for years, yet things like car prices stayed up. Inflation hasn’t eased as fast, so prices haven’t either.

@Andi
Well, that’s interesting to think about.

Anna said:
@Andi
>When rates go down, prices usually go up

But it’s been weird lately. Rates went up, yet prices held high. Used car and home prices haven’t really dropped like expected.

Rates won’t drop until inflation’s under control or prices fall more. They might come down a little, but big drops will likely need a recession, which would also hit home values, leaving many with loans they can’t refinance.

@Andi
2008 vibes?

Indra said:
@Andi
2008 vibes?

Not quite like 2008. Back then, a lot of people had risky loans. Now, most homeowners have fixed low rates.

Skylar said:

Indra said:
@Andi
2008 vibes?

Not quite like 2008. Back then, a lot of people had risky loans. Now, most homeowners have fixed low rates.

Exactly. It wasn’t just interest rates in 2008; it was also subprime and high-risk loans.

Skylar said:

Indra said:
@Andi
2008 vibes?

Not quite like 2008. Back then, a lot of people had risky loans. Now, most homeowners have fixed low rates.

The difference is big. Back in 2008, rates were around 6%. Now we’re well above that, and markets like cars are still high-priced.

Skylar said:

Indra said:
@Andi
2008 vibes?

Not quite like 2008. Back then, a lot of people had risky loans. Now, most homeowners have fixed low rates.

True. Rates are up, and some recent buyers stretched their budgets hoping to refinance later. If rates don’t drop, some could struggle, though it might not be a full-blown collapse.

@Indra
Around 85% of current mortgages are at 5% or less, so even fewer homes would go underwater.

Skylar said:
@Indra
Around 85% of current mortgages are at 5% or less, so even fewer homes would go underwater.

Another thing worth thinking about.

Skylar said:

Indra said:
@Andi
2008 vibes?

Not quite like 2008. Back then, a lot of people had risky loans. Now, most homeowners have fixed low rates.

Equity is a big factor. Folks who paid top dollar with low rates now see home values lagging. Many financed close to 100%, and if values drop, they’re in a tough spot. Smells like short sales coming back.

Skylar said:

Indra said:
@Andi
2008 vibes?

Not quite like 2008. Back then, a lot of people had risky loans. Now, most homeowners have fixed low rates.

Adjustable rate holders aren’t thrilled with these changes.