Hey, Kyle here with WintheHouseYouLove.com.
I'm gonna show you exactly how much.
Having a higher credit score will save you an interest.
It will lower your interest rate and lower the amount of interest you have to pay
over the lifetime of your loan, which can equate to tens of thousands of dollars.
Now the main problem you might be having is you just continue to
increase your credit score, but you don't have a target in mind.
You're not really sure what you're shooting for.
And so what a lot of people do is they get in a situation where they just keep
trying to increase increase for the sake of it never really going anywhere.
They don't have a target.
So what we want to do is actually have a target in mind so you know
exactly what you're trying to hit.
Okay, so I'm first gonna show you how interest rates are determined based on
your credit score on a conventional loan.
And this is what's through what's called a Loan Level Price
Adjustment Chart, an LLPA Chart.
And this is the risk based pricing system that conventional loans use
that basically say how risk is a loan compared to your credit score, your down
payment, and a couple other factors.
And that's gonna change your interest rate.
So I have a chart for this.
It's at WintheHouseYouLove.com/ratehack.
To be able to access this.
So what I did on this chart here is I took these adjustments and converted them
into some average interest rate changes.
And the reason I did this is cuz the main chart is kind of confusing to understand.
And so what I want this, what I want you to see from this is how much your
interest rate could change based on the credit score bracket that you're in and
the down payment bracket that you're in.
Now, I've made some other videos about the down payment.
We're just gonna focus on the credit score.
So the way that you read this chart I know can be a little bit confusing.
This is an adjustment to your interest rate and these are just estimates.
Okay?
So the actual chart has static numbers and I converted these
into interest rates for you.
Okay?
So what you would do is you would take one of these numbers plus a base rate.
Now, only your lender would know what that is, so we're
just going to make an estimate.
Let's say our base rate is 6%.
Just as an educational example here.
Okay, so let's say we're looking at doing 5% down, so we go to this range.
If we had a 780 credit score, we could estimate we would be around a 6.125.
Okay?
That's just an example here on how to use the chart.
Now, if we had something like a 700 score, we would have a 6.563.
Okay, so you can see by having a higher credit score, we save
ourself about 0.4% in interest rate.
So what's really helpful about this chart is you can then take a
look through and see how much more benefit you're going to get by
having a higher credit score, right?
A 620 compared to a 780 credit score is a difference in a whole 1% in interest rate.
So someone who has a 620 credit score is likely going to have at least a
higher you know, 1% higher interest rate than somebody with a 780 credit score.
And you can look at this all throughout different down payment levels and
different credit score brackets.
So the main thing that we can understand from this is that by
increasing your credit score, you can get a lower interest rate.
That's, doesn't, that, it's not a super novel idea, but this chart
really helps you see exactly how much your interest rate could change.
So let's run through an example.
So I made a calculator called the Loan Clarity Advisor and it helps
you compare different loan scenarios.
The link for that's in the description.
You can also go to WintheHouseYouLove.com/advisor.
But I wanted to compare, let's go through.
A couple examples.
Let's compare 680 versus a 700.
Okay, so let's run through an example here.
We're looking at a 680 score versus a 700 score with 5% down.
So here in this bracket, 680 would be an adjustment of about 0.6, eight, eight, and
700 would be an adjustment of about 0.563.
So I went ahead and put that into my loan Clarity Advisor software.
We're just gonna run, you know, maybe a $400,000 purchase price.
So I put in these two options.
They're both conventional loans at 5% down, and you can see the
difference in interest rate here.
Everything else should be the same.
All right, so now if we look, and let's say we're gonna look over 10 years by
having a 700 credit score, we would save just shy of $5,000 by having that.
Over.
If we look at, let's say 20 years, that's gonna put us closer to $9,000 in savings.
Okay?
Let's look at another example.
Let's say we're looking at 640 versus 780.
Let me change these numbers up here and then I'm gonna go back
here and look at our chart.
So we're gonna look at let's see, 640 is going to put us at 938.
So I'm gonna change our interest rate here.
I'm just gonna do 6.938 and if we're looking at 780, we're going to be at .125.
Okay.
So that difference then over 10 years is $31,000.
Over 20 years, we're gonna be closer to $60,000 in savings and
over 30 years, $75,000 in savings.
Of course, that's a pretty big difference in the credit score brackets there.
So really the main takeaway I want you to have from this is understanding that the
more that your credit score increases, the more that you have a target for where
you want your credit score to be at.
The more savings you're going to get by taking advantage of the
way that risk-based pricing is created inside a conventional loans.
And have a quick chart here that kind of shows a couple of these brackets, right?
If you have a 780 maybe you're getting around a 6.625% interest rate.
And these are just educational examples here.
This is not like an offer here.
Alright, so the 10-year cost and interest and mortgage
insurance on a loan like this.
You know, if we're looking at a $400,000 loan, It's gonna be some around $256,000.
If we have just a 720, slightly less than that, our interest
rate would go up to 6, 8, 7, 5.
The cost would skyrocket up $9,600 over 10 years.
Okay?
If we're looking at a 680 credit score, we're going up to a 7.25% rate.
About $24,000.
Difference.
We're paying $24,000 more because we have a lower credit score, and then with a
620, okay, we'd be looking at a 7.875% and paying almost $50,000 more over 10
years by having a lower interest rate.
So it pays to have a higher credit score.
Now you don't have to always shoot for the 780 marker here.
You get to decide, you know, maybe, and you're in one of these brackets,
what kind of cost savings do you want and how long is it going to
take you to get to that score range?
And that's where a lot of people struggle is they say, I wanna get
a higher credit score, obviously to save more money and interest, but I
don't know exactly how to get there.
How much money it's gonna take and what my timeline is going to look like.
And that's why you need a credit simulation software like ScoreMaster.
So Score Master has this tool called ScoreBoosts to quickly add points
to your score and it helps you strategize the best way to do that.
So I wanna show you a demo of how this works.
All right, so I'm in a test account right now and you can
go to ScoreMaster.com/kyle.
There's a $1 seven-day trial if you wanna try it out.
But what I'm mainly interested in right now is this ScoreBoost feature.
So what we can do inside of ScoreBoost is once you have figured out where
your credit score is, right now, and you can do that inside of ScoreMaster.
Once you figure that out and then you figure out what kind of bracket you
want to be in with the interest savings that you want, you can then use this
slider here and it's going to take a look at your accounts that you have
and then what strategy is going to work to add points to your score so you can
see an estimated future score here.
Along with how many points you need, how much it's going to cost you.
And then down here it's gonna show you an example of the timeline of what
that's going to take, because a lot of people just kind of throw money
at their debt and hope for the best.
The nice thing about ScoreMaster is they have algorithms on the backend
to understand exactly when these payment due dates are needed with your
different accounts to make sure that they can add points to your score.
So, for instance right now, let's say in this test account, we're at a 6 39.
Let's say I wanted to get to the 680 range.
Okay?
So to get to 680, I would need to add 41 points, so it would cost me $5,700.
Now the way that's allocated is gonna be through these
three different accounts here.
So with the Amex card, again, these are all just fake.
With the Amex card we would need six points, and that would happen in 10 days.
And the way that we're going to do that is by paying $869.
Pay it by the 30th.
So May 30th of this year.
Okay.
And then we can see when the credit score will update on.
All right, so it does that with all of the accounts, how much we need to pay
by, when we need to pay it, when we'll see the score change and the overall
impact to your future score as well.
And this is gonna be the quickest way for you to strategize what's the right plan to
get you to the credit score bracket that's gonna save you the most in interest.
One other feature that can help add points to your score is the ScoreBuilder.
And the main thing that the score builder will help you do
is take actions on your report.
So it's gonna walk you through a long-term plan here.
So this test account is kind of partway through it, so I'm just gonna go
through some of these really quickly.
It shows you what's helping your score and what's hurting your score.
And then here's what actions we can take.
So we can do things like fixing errors, get goodwill corrections pay off or
negotiate debts and remove identity theft.
And so in here is where we can look at our different accounts
and take action if we need to.
So if in here we see that there was an error on our report, it's really easy
for us to go in here and fix that error.
And score master can help us through here when we go through and select
the reason for the error and add any additional details to the report.
And again, ScoreMaster offers a $1 seven day trial.
This is what I personally use to manage my credit score because not
only does it help with all these tools, but they also do have.
Identity protection and also helps with privacy protection as well
to move your information from a bunch of data broker sites.
So the main benefit here of why you obviously want to increase your
credit score to get a better interest rate and using tools like a credit
simulator is really to forecast exactly how long it's going to take you.
To get to a higher score instead of just throwing money at accounts
hoping that your score goes up, which is what a lot of people do, it's
better to just have a simulator tell you what is the best plan of action
to get you to where you want to go.
The credit score that you want with the least amount of money paid down on your
debts and in the quickest time possible.
So then when you're at the bracket, when you're at the credit score bracket that
you want, you're like, this is where we feel comfortable with the most amount
of savings with a timeline that works for us, then you want to go ahead and
apply for a loan when you're at the interest rate bracket that you want.
When you're ready to talk with a member, a mortgage advisor on my team,
you can go to WintheHouseYouLove.com.
We work in all 50 states.
Now, if you're curious on how to get a waiver for an even lower rate,
if you don't wanna worry about Loan Level Price Adjustments, then you
wanna watch the video right over here.