How Your Credit Rating Can Cost Or Save You Thousands Of Dollars

What A Lower Score Costs

These examples use illustrative rates for a borrower with a strong score and one with a fair score. Your actual rates depend on the lender, the market and your full application.

The average rate on US credit card accounts charged interest was 22.36% in August 2026, according to the Federal Reserve. If you pay your card in full each month, your score matters more for getting approved for rewards cards than for the rate.

Save This Article

Email this article to yourself

We'll send you a link to "How Your Credit Rating Can Cost Or Save You Thousands Of Dollars" so you can read it later, plus The Weekly Ritual, our free newsletter. Unsubscribe anytime.

Email address

Email It To Me

Email me this article and sign me up for The Weekly Ritual. See our privacy policy.

Where Else Your Credit Rating Matters

• Insurance. Most US states let auto and home insurers use a credit-based insurance score in pricing. Some states restrict it or ban certain uses, according to the National Association of Insurance Commissioners, so check your state insurance department's rules.
• Renting. Landlords pull credit to decide whether to rent to you and how big a deposit to charge.
• Utilities and phone plans. A thin or weak file can mean a deposit before service starts.
• Jobs. US employers need your written permission to check your credit, and several states and cities restrict the practice. Federal security clearances review your finances under the "financial considerations" guideline, so unpaid debts can hold up a clearance.
• Student loan refinancing. Private lenders price refinancing largely on credit, and a stronger score can cut thousands from the total cost.

What Goes Into Your Credit Score

The most damaging events are late payments of 30 days or more, collections, charge-offs and bankruptcies. A single late payment can drop a high score sharply, and it stays on your report for seven years, though its effect fades over time.

Credit Score Ranges By Country

Scores don't travel. If you move countries, you generally start a new credit file from scratch, so open a basic card or account in your new country early.

What Changed In 2025 And 2026

• More score models for mortgages. The Federal Housing Finance Agency announced in July 2025 that lenders could use VantageScore 4.0 as well as Classic FICO for loans sold to Fannie Mae and Freddie Mac, and since Sept. 9, 2026, all approved lenders can, according to the FHFA. FICO 10T is approved but not yet accepted.
• Crypto as a mortgage asset. In June 2025, FHFA directed Fannie Mae and Freddie Mac to prepare to count crypto held on US-regulated exchanges toward reserves without converting it to dollars. Ask your lender whether its loan programs accept crypto as an asset yet.
• Defaulted student loans are back. The Education Department restarted collections on defaulted federal student loans on May 5, 2025, and defaults are again reported to the bureaus.
• Medical debt. A federal court in Texas vacated the CFPB's rule removing medical debt from credit reports on July 11, 2025, according to the CFPB. The bureaus still voluntarily leave off paid medical collections and those under $500.

Does Crypto Affect Your Credit Score?

Buying, holding or selling crypto doesn't show up on your credit report and doesn't change your score. Crypto can affect credit in other ways:

• Crypto credit cards are ordinary credit cards that pay rewards in crypto, so they build or hurt credit like any other card.
• Crypto-backed loans from lenders such as Ledn use your coins as collateral and generally don't require a credit check. If the coin's price falls, the lender can sell your collateral.
• Mortgage applications may soon let you count crypto as an asset, as described above, but you still need the income and credit to qualify.

How To Track And Improve Your Credit Rating

You can pull free reports from all three US bureaus every week at AnnualCreditReport.com and dispute any errors directly with the bureau. For ongoing tracking, Credit Karma offers free scores and monitoring in the US and runs separate sites for the UK and Canada.

To improve your score, set every bill to autopay at least the minimum, pay card balances down before the statement date, and avoid opening several new accounts at once. Our page on how to improve your credit covers more steps, and a free credit freeze protects you from new-account fraud.

What To Watch Out For

• Credit repair companies. They can't remove accurate negative information, and under federal law they can't charge you before doing the work.
• Closing old cards. Closing your oldest card can shorten your history and raise your utilization.
• Co-signing. A co-signed loan is your loan too, and late payments land on your report.
• Crypto loan liquidations. A sharp price drop can wipe out your collateral even though your credit report never shows the loan.

Update

From the Cult of Money editors, November 2026: Karl wrote this post in January 2012, and it was last touched in 2021. We've kept his core point, that your credit rating quietly costs or saves you money on nearly everything, replaced the 2012 FICO charts and dated loan figures with worked examples, and added score ranges for other countries, recent rule changes and how crypto fits in. His advice from 2012 still stands: don't be even a little late paying your bills.

FAQ

How Much Can A Good Credit Score Save You?

On a $350,000 mortgage, the difference between a 6.25% and a 7.75% rate is about $127,000 in interest over 30 years. Smaller loans and credit cards add thousands more over a lifetime.

What Is A Good Credit Score?

In the US, FICO scores of 670 to 739 are considered good, 740 to 799 very good and 800 or higher exceptional. Lenders set their own cutoffs, and the best rates typically go to scores above 760.

How Long Does A Late Payment Stay On Your Credit Report?

Seven years from the date of the missed payment. Its effect on your score shrinks over time, especially if you pay on time afterward.

Does Buying Crypto Hurt Your Credit?

No. Crypto purchases and holdings aren't reported to the credit bureaus. Using a credit card to buy crypto can raise your balance and utilization, and some card issuers treat those purchases as cash advances with higher fees.

Can I Use Crypto To Qualify For A Mortgage?

FHFA directed Fannie Mae and Freddie Mac in June 2025 to prepare to count crypto held on US-regulated exchanges as an asset. Check with your lender on whether it applies yet, since you'll still need qualifying income and credit.