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?
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
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.
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.
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.
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.