Why is your credit score important?
It may be one of the most important numbers in your life – besides your blood pressure reading – because it helps determine the availability and cost of credit for vehicle and other purchases.
The term itself might boost the blood pressure of some consumers seeking to finance their purchases.
For example, the payment on a $20,000 retail installment contract at 5 percent interest would be about $377.50 a month over five years, according to our auto finance calculator. The monthly payment on the same contract at 10 percent interest would be about $425. That’s a difference of almost $50 a month every month for 60 months, or $3,000 over the life of the contract.
At 15 percent interest, the monthly payment on that contract would be about $476 or almost $100 a month higher than the best-rate example and about $6,000 more over 60 months.
To help you better understand why your credit score is so important and what it is based on, we’ve produced a short video. Part of this week’s series of videos, Why your credit score is important appears in our online Learning Center with other useful credit information.
Your credit score
Your credit score can play a pivotal role in your financial journey.
According to the Consumer Financial Protection Bureau, or CFPB, a credit score is a number used to predict how likely you are to pay a loan back on time.
So, when asking for a loan, your credit score matters.
Financial institutions use these numbers to determine how risky it would be to give you a loan. And usually, the lower the credit score, the greater the risk.
Companies like Santander Consumer USA use a FICO score, in addition to other factors, to make lending decisions.
Your credit score can dictate:
- Whether you’re approved for a home or auto loan;
- How much interest you pay on a loan;
- And whether you’re approved for things like apartments, auto insurance and even cell phone plans.
To keep your credit in good standing, the CFPB offers tips like …
- Leaving plenty of room on your credit cards and not getting too close to your credit limit
- Only applying for the credit you need
- And paying your bills on time
So stay in the know about your credit profile and credit score. It can help set the expectation for how much you can borrow towards a large purchase.
For more videos and smart financial tips, visit our Learning Center at SantanderConsumerUSA.com.