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I recently checked my credit score via two of my credit card providers. It seems to be hovering between 790 and 815. One service brands the score it provides as a FICO score and the other specifically says its score comes from Transunion.

What can I actually do to leverage this high credit score to my advantage?

The only new debt I might take on would be a small HELOC or car loan. Does a high score give me any negotiating power with the lender to get a better rate? Should I treat the score as a card in my hand or is it something I should show early in negotiations?

Does a high score make me eligible for any discounts on insurance?

Does a high score open up any options for earning more interest on savings accounts?

The typical advice I'm reading suggests refinancing a mortgage. That seems like good advice in general but it does not apply to my personal circumstances. I've got 3.5% on a 15 year note with 9 years left. A casual review of current rates suggest I could maybe scrape 0.5% off of that, hardly seems worth the effort and cost for half a percent.

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    "I could maybe scrape 0.5% off of that, hardly seems worth the effort and cost for half a percent." Correct. No one said that refi is always worth it. – RonJohn Sep 16 at 14:23
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    It seems to be hovering between 790 and 815 on both FICO and Transunion at the risk of being pedantic, FICO is a scoring model, and Transunion is a credit bureau. To check a credit score, you essentially ask a bureau to give you your score with a specific model. So, you can get a FICO score from Transunion. Or a VantageScore from Equifax, and so on. The most common models are FICO and VantageScore, while the big three bureaus are Equifax, Transunion, and Experian. – dwizum Sep 16 at 14:36
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    Saving 0.5% on 9 years of your remaining mortgage is just shy of $2,500 in savings per $100k. A streamlined/no-cost refi could definitely be worth inquiring about with your current lender. – Hart CO Sep 16 at 16:20
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    Having excellent credit is not very exciting, – Hart CO Sep 16 at 16:25
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    The 1/2% - run the numbers. Always. I bought in 1996, at 7.75%, And was a serial refinancer on the way down. Once was from 5.25 to 5.0%. Bank had a no cost refi available, and even a small monthly savings was worth the 2 hours of my time. – JTP - Apologise to Monica Sep 16 at 16:43
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What can I actually do to leverage this high credit score to my advantage?

Borrow money. Although I'd question whether that's actually to you advantage or not - it depends on what you're borrowing the money for and whether the interest you're paying is worth the benefit to you.

Does a high score give me any negotiating power with the lender to get a better rate?

Consumers are generally price takers when it comes to loans, so your score doesn't really give you any bargaining power. You'll still need to shop around to get the best score possible. The banks will all know your credit score before quoting a rate, so you don't really have any leverage here. I'd negotiate on price with walk-away power instead of trying to haggle on rate.

Banks and credit card companies want you to think you open up a whole new world with a great score, because in order to get a great score you have to borrow money. Even if you pay your CC in full every month and pay no interest, they are making money off of the increased transactions from merchants.

Does a high score make me eligible for any discounts on insurance?

If there is a discount it's not obvious. I have a great credit score and see no specific discount tied to it, and I have 15 discounts - it seems odd that they wouldn't specify a good credit score discount if they offered one. Car insurance is tied more to what cars you drive and your driving record, which translates to the odds of an accident. I don't know that there's a strong correlation between credit score and either of those factors.

Having a bad credit score, though, might be a significant burden. It might require you to make security deposits for utilities, disqualify you from certain loans, and even certain jobs. I've heard multiple stories where a person was denied a job in a high-trust position (e.g. bank teller) due to a poor credit history. (To be fair, this is probably very rare and not the only factor in hiring, but it is a possibility).

Bottom line - having a great score vs a good score doesn't really buy you a whole lot unless you borrow a lot, which means you just pay less interest. Having a good vs. a bad score, though, can give you opportunities that you wouldn't have otherwise.

You should be proud of what you did to get that great score - managed money wisely, honored your obligations, lived within your means, etc. But that score isn't some sort of "magic bean" that changes your life.

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    Regarding car insurance: do they also list your "over age 25" discount? (My point being that they don't list every factor that goes into rate determination as a "discount.) – RonJohn Sep 16 at 13:55
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    @RonJohn No, so that might be baked into the "base" price. That's why I say it might be there but is not obvious (at least not to me). – D Stanley Sep 16 at 14:14
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    Car insurance rates are almost always correlated to credit scores. Credit scores for car insurance are good predictors of whether you pay your bills, are likely to file a claim/the total cost of the claim, and more than anything else - a predictor of your decision making skills and risk tolerance. I've seen it cited that credit scores were the first non-actuarial data element used to generate your cost of insurance. While you don't see a specific discount for auto insurance, it's definitely baked into the price. – technogeek1995 Sep 17 at 0:09
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    Top results on Google verify my comment - FTC & Edmonds – technogeek1995 Sep 17 at 0:09
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    When we went through our last mortgage renewal, our mortgage broker claimed he was able to negotiate a better rate from what was initially offered by the lender he chose because of our "exceptionally" high credit scores, and he did show us a printout with rates offered by all the lenders he submitted to. However, that could just be a salesman doing his thing. – Scott Whitlock Sep 17 at 18:10
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Does a high score open up any options for earning more interest on savings accounts?

The credit score is officially a judgement of the risk as to whether or not you will pay back a loan. Others will use it as a proxy for general trustworthiness.

The only criterion that banks (and investment firms) use to determine what rate they'll offer you is how much money you're going to deposit with them.

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The only new debt I might take on would be a small HELOC or car loan. Does a high score give me any negotiating power with the lender to get a better rate? Should I treat the score as a card in my hand or is it something I should show early in negotiations?

Let's focus on car loans. First off, it's important to keep in mind that the incentives for the person selling you the car are often much different than what people think they are. It may seem like walking in with a suitcase of cash will allow you to negotiate much easier than someone trying to get a loan, but it may very well be the case that it's in the dealers interest to sell you the loan instead of taking cash. Or they might make more money off of someone with medium level credit rather than excellent credit. It varies and it doesn't always make much sense from the buyers perspective.

At any rate, the short answer for what a very high credit score gets you is: not much. Car loans are some of the safest loans to make -- when people get into financial trouble car loans are pretty much the last thing they will stop paying on. The reason why is simple: most people who have a car need that car (or at least would be extremely inconvenience without it) and it's a lot easier to repossess a car than it is to go through a foreclosure on a house.

Further, from the perspective of the auto loan scorecard there tends to little to no difference (holding everything else equal) between someone with 750 and 800 credit score. After a certain point in FICO scores, other factors, such as previous auto loan history (and especially down payment / debt to income ratios), are MUCH more important. Put another way, the difference between 650 and 700 is huge, the difference between 750 and 800 is negligible.

As for negotiation, typically the dealer at a major dealership isn't really going to care. Again, there just isn't much difference between a very good score and a great score and further the dealer may not be incentivized to care regardless. It may, however, allow you to navigate the manufacturer incentives better. A quick example. The dealer may have two incentives, of which you can only choose one: a 0% loan for anyone with a FICO over 620 or $xxxx cash back. If you have a FICO score of 630, the 0% loan is almost certainly the best option. But with excellent credit you might be able to obtain a loan with low enough interest such that the cash back is the best option.

tldr: after around 750 or so your FICO score makes very little difference for auto lending.

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You can't do all that much. The credit score is a number, so people think that having more of it is proportionally better. In practice, it acts as a threshold. It is more useful to think of it as "lendable" vs. "deadbeat".

Generally, there will be some low point (eg. 650) where if your credit score is not at least that much, you won't be getting any loans period. Sounds a bit arbitrary, but you only end up there if you are known not to pay off loans (ie. a deadbeat) or nobody knows whether you pay off loans because you haven't taken any. Above that, there is a small range where higher credit score means slightly lower interest rates and slightly better quality credit cards (eg. cashback and so on). These benefits top out at a high point (eg. 750) after which you don't get even better offers for having a higher score. You end up above that high point by simply paying off your loans on schedule as a reasonable person would. If you miss a payment here and there it won't change things that much, what matters is whether you are overall in control of your finances or not - people who are not in control tend to quickly ruin themselves and become unable to pay off any loans, rather than just some.

For a bank, ideally you would be a "lendable" person (>750 or whatever) which basically means that barring any unusual circumstance, you can be relied on to pay off your debts. They can determine the interest based mainly on business concerns (how much money they want to make, expenses, and so on). Below that, you get people who cannot be relied on to pay off the loan. Ordinarily, you would simply not lend to such a person, but a bank can squeeze some water from a stone by driving up the interest enough to cover defaults and delinquencies. But once you get people who are truly deadbeats, it is impossible to loan to them at any interest rate (there are legal limits on how much you can charge - these days you can't sell people into galley slavery to cover your losses). So it's not that having a high a score gives you better offers, it's that low scores give you worse offers. If you have good credit, you will get reasonably fair offers. If you have poor credit, you will get unfair offers, but that's okay in a sense because you are expected to possibly not pay it back at all. If you have terrible credit obviously you get no offers at all.

You can't easily monetize a very high score because most lenders are in it for a profit. They will never give you an offer where you win and they lose. You can make modest gains (3-5%) with credit cards that have cash back or statement credit. You can get a bit more by churning (serially signing up for high-range credit cards to abuse their introductory bonuses), but you still won't get rich from it. You can't convert a high score to something like a big mortgage or auto loan, because few lenders are stupid enough to lend purely based on your credit score. They will also look at your income and collateral. No matter how principled and disciplined you are, it is unlikely you can handle a loan with interest rates bigger than your income and net worth, for instance.

I would advise against trying to monetize your credit by "borrowing money". Even a mortgage will still have 3-4% annual interest, auto loans will be higher, credit cards will rarely be <10%. You will be losing a lot of money. You should take these loans only if you will actually gain something from it (credit cards have benefits, cars and houses may improve your quality of life), not purely because your credit score is high. Borrowing a large sum of money also incurs significant risk (cars can crash, houses can burn down, both can depreciate due to wear and market forces) which should be considered more carefully than looking at your credit score. If your credit score is very high, the most useful thing you can do is relax a bit and stop worrying about your credit.

The exception is if you have some bad (eg. high interest) loans from when you had poor credit. You might be able to convert these into better loans by refinancing.

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A half percent on a loan over 5 years (which is a napkin math approximation of a 9 year amortization) on 100,000$ is 2500$.

I get that fractions of a percent aren't sexy. But how much is 2500$ worth to you?

  • how much is 2500$ worth to you? Potentially: less than what it costs to close a new loan. – dwizum Sep 17 at 19:49

protected by Chris W. Rea Oct 9 at 11:11

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