When you take a large loan to finance a big purchase like a home or car, even a small difference in the interest rate can translate into thousands of dollars over the lifetime of a loan. Borrowers with the highest credit scores are generally able to secure the lowest interest rates available at a given time for a mortgage or auto loan. And that can mean big bucks.
For example, a 30-year fixed mortgage of $250,000 at 5.5% will cost a borrower a total of $511,010 over the lifetime of the loan. If that same borrower can get a 4.5% interest rate—just one percentage point lower—she will pay $456,017 over the life of the loan, a difference of $54,993.