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Raising a Fair Credit Score to Very Good Could Save Borrowers Nearly $50,000

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Amid intimidating headlines about rising interest rates and a potential recession, Americans are looking for ways to save money. Aside from cutting coupons and skipping takeout, one way consumers can save money is by improving their credit score.

In fact, the latest LendingTree study shows that raising your credit score from fair (580 to 669) to very good (740 to 799) could save you almost $50,000. To put that into perspective, median earnings for Americans in 2020 were $36,280, according to the U.S. Census Bureau.

Researchers utilized anonymized loan request and average loan balance data from LendingTree users to conservatively measure the difference over the lifetime of loans across these two credit bands for credit cards, personal loans, auto loans and mortgages.

Key findings

  • Raising your credit score from fair to very good could save you nearly $50,000. Borrowers with four common debt types — credit cards, personal loans, auto loans and mortgages — could save $49,472 over the lifetime of the loans by improving their credit from fair (580 to 669) to very good (740 to 799).
  • This breaks down to a monthly savings of just over $250, which is especially important amid rampant inflation. Total average monthly payments would be $3,029 with fair credit or $2,777 with very good credit — a difference of $252.
  • Improving your credit score has the largest impact on your mortgage costs. A boost from fair credit to very good could lead to $40,041 in mortgage savings, accounting for 81% of the nearly $50,000.
  • Finding your best offer can make a big difference, as the gap between the lowest and highest APRs offered to the same consumers can be significant. Consumers with very good credit could save $12,654 on personal loans, $36,498 on auto loans and $377,766 on mortgages if they get the lowest APRs instead of the highest.

Building your credit score could save you nearly $50,000

This LendingTree analysis found that raising your credit score from fair (580 to 669) to very good (740 to 799) could save you a whopping $49,472.

No, raising your credit score doesn’t entitle you to a lump sum of money. This study assumes borrowers have a credit card, personal loan, auto loan and mortgage with an average loan amount and annual percentage rate (APR) based on the debt type. The nearly $50,000 figure shows the total cost difference for a borrower with a fair credit score and one with a very good score.

Here’s a high-level look at how much money fair-credit borrowers could save depending on their type of loan if they were to raise their credit score to very good:

  • Credit card: $3,747
  • Personal loan: $3,171
  • Auto loan: $2,513
  • Mortgage: $40,041

The largest area of savings — by far — was mortgages, with $40,041 making up 81% of the previously stated $49,472.

“There’s very little in life that is more expensive than having crummy credit,” says Matt Schulz, LendingTree chief credit analyst. “A low credit score could cost you thousands — or tens of thousands — of dollars over your lifetime in the form of higher interest rates and fees, and it could even keep you from getting that loan altogether.”

This is because your credit score demonstrates to lenders how likely you are to repay the money. The better your credit, the more likely you are to get approved for a loan and the better terms that loan will likely have.

“If your credit score is low, banks aren’t going to trust you to pay them back,” Schulz says. “If they choose to lend to you, they may charge you a really high interest rate or extra fees to protect themselves and minimize their own risk.”

We found that average monthly payments for these loan types would equal $3,029 for those with fair credit and $2,777 for those with very good credit. This means that good-credit borrowers could save $252 a month, which is nothing to turn your nose at, given concerns over soaring inflation.

“It’s much more expensive to borrow today than it was six months ago, and it’s likely to only get more expensive in the near future,” Schulz says. “The Federal Reserve has shown no signs that it’s going to stop raising rates anytime soon in its battle with inflation.”

Money saved by raising your credit score from fair to very good
Fair credit (580 to 669)
Debt type Average loan amount Loan term APR Monthly payment Total payments
Credit card $6,569 Variable 24.45% $71 $18,690
Personal loan $11,980 3 years 29.87% $508 $18,277
Auto loan $28,212 5 years 9.26% $589 $35,352
Mortgage $314,391 30 years 5.88% $1,861 $669,938
Total $361,152 $742,257
Very good credit (740 to 799)
Debt type Average loan amount Loan term APR Monthly payment Total payments
Credit card $6,569 Variable 17.19% $60 $14,943
Personal loan $11,980 3 years 15.74% $420 $15,106
Auto loan $28,212 5 years 6.14% $547 $32,839
Mortgage $314,391 30 years 5.32% $1,750 $629,897
Total $361,152 $692,785
Source: Analysis of second-quarter 2022 anonymized LendingTree consumer loan offers data.
Total average monthly payments
Fair $3,029
Very good $2,777
Difference $252
Source: Analysis of second-quarter 2022 anonymized LendingTree consumer loan offers data.

Comparing loan offers could save consumers tens or hundreds of thousands of dollars

This brings us to our next point: how to save money on a loan, whether it’s for a new vehicle or a home improvement project. The disparity between the lowest and highest APRs offered to consumers can be significant.

For instance, we found that consumers with very good credit could save quite a bit if they take the lowest APRs offered.

How much? Here’s how much borrowers could save based on the type of loan they take out:

  • Personal loan: $12,654
  • Auto loan: $36,498
  • Mortgage: $377,766
Cost difference in average lowest and highest APRs
Very good credit (740 to 799)
Personal loan Auto loan Mortgage
Average loan amount $11,980 $28,212 $314,391
Average lowest APR offered 11.01% 4.10% 4.72%
Average highest APR offered 21.64% 7.69% 5.98%
Difference (basis points) 10.64 3.59 1.26
Difference (cost over life of loan) $12,654 $36,498 $377,766
Source: Analysis of second-quarter 2022 anonymized LendingTree consumer loan offers data.

“Shopping around is vital,” Schulz says. “While offers will certainly vary depending on your credit score, they also frequently vary based on the lender.”

One strategy to use when shopping around is to use offers you’ve gotten from other lenders to frame your negotiation, Schulz says.

“If you’ve seen offers at other websites, in your snail mail or at your local bank branch, share them with other lenders and see if they’ll work with you,” Schulz says. “There’s no guarantee that you’ll get your way. But if you don’t ask, the answer is always no.”

4 methods to raise your credit score from fair to very good

A low credit score can make it challenging to qualify for low interest rates and be exponentially more expensive than if you had good credit.

There are steps you can take to increase your credit score, improve your odds of getting approved for credit opportunities and potentially save money. Here’s a closer look:

  • Check your credit report for errors: A simple way to boost your credit score is to check your credit report for errors. About 1 in 5 consumers find mistakes on their credit reports, and disputing those errors can get them removed. Once those errors are removed, your credit score may see a boost.
  • Make on-time payments: Your payment history makes up 35% of your FICO Score. In fact, if you miss a payment, your credit score could drop anywhere from 90 to 110 points. On top of that, you may have to pay late fees to your lender. To avoid this, staying on top of your payment due dates is wise. And if you don’t think you’ll be able to make a payment, talk to your lender to see if it would be willing to offer you some flexibility.
  • Consider a debt consolidation loan: Missing payments on your bills could cause your credit score to plummet. To keep up with your payments, Schulz suggests looking into debt consolidation loans. They can not only make it easier to manage your various bills, but they may also save you money if you qualify for lower interest rates.
  • Use the debt avalanche or snowball method: The lower your credit utilization ratio, the higher your credit score could be. Schulz encourages borrowers to use the debt avalanche or debt snowball method to aggressively pay down debt and improve their credit utilization ratio. While the debt avalanche method prioritizes paying down debts with the highest interest rates, the debt snowball method guides borrowers to pay off the smallest debts first. Schulz prefers the debt avalanche method to save money in the long run.

If you find yourself in a situation where your credit score has significantly improved since a loan or credit card offer was made, you can still find ways to save.

“You don’t have to settle for paying the same rates that you were stuck with when your credit wasn’t as great,” Schulz says. “Consolidating and refinancing higher-interest debt with a 0% balance transfer credit card or a low-interest personal loan can be a great place to start.”

Another way to save money if you have credit cards is to ask your creditor for a lower rate. According to an April 2022 LendingTree study, 70% of people who asked their credit card company for a lower rate received one, Schulz says, but far too few people ask.

“The better your credit, the more likely you probably are to get your way,” Schulz says. “However, if you have good news to share with your card issuer about a real improvement in your credit score, you should tell them and ask if they’d consider lowering your interest rate.”


Average balances and APRs for personal loans, auto loans and mortgages were calculated from offers on the LendingTree platform in the second quarter of 2022, aggregated by credit score band with a focus on fair (580 to 669) and very good (740 to 799). We assumed 30-year mortgage terms, 60-month auto loan terms and 36-month personal loan terms.

The average credit card balance was calculated using more than 1 million anonymized LendingTree users’ credit reports from January 2021 through February 2021. We assumed credit card borrowers paid the monthly minimum on the existing debt. Credit card APRs were based on a July 2022 LendingTree analysis of about 200 credit cards from more than 50 issuers.


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