A lot of people are curious about their credit score range and exactly what it means in terms of their ability to get loans and what kind of interest rates they will get. All lending institutions have their own formulas they use to determine who will qualify for what type of loan, but this article will give you a general run down of what your credit score means in terms of a real world loan example. Basically the higher your risk level, the higher your interest rates. A low credit score means you’ll pay more for the “privilege” of getting a loan. Banks are essentially gambling on whether you are a good risk or not. A higher credit score range means you will pay a lot less over the life of a loan than someone with a lower credit score range. And I mean A LOT LESS.

Check out these numbers given for a $225,000 home at the national average APR provided by myFICO.com:

As you can see, according to myFICO, someone in the top credit score range of 760-850 will get an APR of 4.69% resulting in a monthly payment of $1,166 versus someone from the lowest credit score range of 620-639 who will only get an APR of 6.28% and will make monthly payments of $1,390. This is a $224 difference paid each and every month. Over the course of a 30 year loan, this will add up to a difference of over $80,000. This is substantial. Bad credit will cost you money. Bad money will keep you from buying a home or a car. And sometimes bad credit can keep you from getting a job.

Remember that although a bad credit score range may seem like the end of world, it can be only temporary if you are willing to work at improving your credit. There are no quick easy fixes, but you can slowly begin to raise your credit score range with some simple easy tips that you will find on this website.