The Cost or Savings of Credit

The Cost or Savings of Credit

Remember “The Golden Rule to Credit”the higher the better when it comes to a credit score.

Consumers have four primary advantages with a higher credit score:

  • Reduces the pain of interest rate hikes,
  • Borrowers qualify for a lower interest rates,
  • Saves money on your monthly loan payments ,
  • A higher score will also more likely qualify for the loan.

Below is a working example comparing two consumers exactly alike in all cases except Borrower A has done a better job of monitoring their credit and has a higher credit score at 740 compared to Borrower B who hasn’t monitored their credit as closely and has a lower credit score of 620.

Note how individual credit affects how much each will pay for a mortgage, all other things but credit monitoring and credit score are the same:


Example: Credit and Mortgage Interest Rates

Borrower A and B are identical in all ways except Borrower A monitors her credit – paying bills on time, utilizing outstanding lines of credit wisely – while Borrower B is very casual about paying bills, sometimes does not pay utilities and causing these bills to be turned over to a collection agency. Borrower B applied for any credit card application in front of him at the moment.

When it came time to purchase a home, Borrower B will pay an additional $281 per month on a $350,000 mortgage for not monitoring their credit. The additional cost was due to Borrower B receiving a higher interest rate than Borrower A. A credit score affects the lending rate for every consumer.

Borrower A
Credit score: 740 “Excellent”
Mortgage: $350,000
Avg. Interest rate: 7.12%*
Monthly Mortgage Payment: $2,357

Credit Savings: $281 p/mo.


Borrower B
Credit score: 620 “Poor”
Mortgage: $350,000
Avg. Interest rate: 8.284%*
Monthly Mortgage Payment: $2,638

Credit Cost: $281 p/mo.


Can Credit and Credit Scores Be Improved?

Consumers may improve a low credit score, but it won’t happen overnight. Time – not much – and a good deal of patience and a dash of discipline is needed to improve credit.

To get your credit on track, visit with DuTrac.


*Borrower A has a mortgage interest rate of 7.12% due to a credit score of 740 or “Excellent.” Borrower B has a mortgage interest rate of 8.284% due to a credit score of 620 or “Poor.” A higher credit score lowers rate by 1.164% and saves $281 per month. Based on national mortgage rates, not those of DuTrac, as of January 3, 2023, on a 30-year mortgage amount of $350,000.



All DuTrac branches will be closed on Monday, December 25, for Christmas Day.

All DuTrac branches will be closed on Monday, January 1, for New Year's Day.