Your credit score can affect the interest rate you’re offered, which is why it’s worth knowing before you borrow. Below are the Federal Reserve’s published averages and worked examples with assumed rates, so you can see what a few points of rate cost in dollars.
Credit score: What This Number Is
A credit score is calculated from your credit report. myFICO lists the factors in a FICO score: payment history (35%), amounts owed (30%), length of credit history (15%), credit mix (10%) and new credit (10%). Lenders use scores to assess risk, so in my view a better score gives you more room to negotiate on price.
Who Looks at Your Score
The FTC describes a credit score as a number, typically between 300 and 850, that estimates how likely you are to repay a loan. It says businesses use your score to help decide whether to give you credit and what the terms will be, including what interest rate you’ll pay, and that cellphone companies and auto and home insurers also use credit scores (FTC: Credit scores). myFICO adds that carrying debt isn’t automatically a problem and that one or two late payments don’t automatically sink a score (myFICO: What’s in my credit score).
The myFICO breakdown weights payment history at 35%, amounts owed at 30%, length of credit history at 15%, credit mix at 10% and new credit at 10%.
What the Federal Reserve Reports
The Federal Reserve’s G.19 consumer credit release (published October 7, 2026) reports these averages:
| Federal Reserve G.19 (commercial banks) | Rate |
|---|---|
| Credit card plans, all accounts (Aug 2026) | 21.19% |
| Credit card plans, accounts assessed interest (Aug 2026) | 22.36% |
| New car loans, 60-month (Aug 2026) | 7.54% |
These are averages across borrowers, not offers for any one score tier.
The Mortgage Math, With Assumed Rates
As an assumed example, take a $300,000, 30-year loan. At 6.0% the monthly principal-and-interest payment is $1,798.65 and total interest is $347,514.57. At 7.0% it’s $1,995.91 and $418,526.69, which is $197.26 more a month and $71,012.12 more in interest. A better score isn’t guaranteed to move you from one rate to the other, so treat this as a way to see what a one-point rate difference costs.
HUD says FHA loans offer easy credit qualifying and down payments as low as 3.5%. In my view, if your score isn’t where you’d like it, comparing loan types is worth the time.
The Auto Loan Math, With Assumed Rates
Take an assumed $40,000, 60-month loan. At 6.5% APR the payment is $782.65 and total interest is $6,958.76. At 16% it’s $972.72 and $18,363.34, which is $190.08 more a month and $11,404.58 more in interest.
Credit Cards: Where the Rate Hits Every Month
The Dollar Cost on a $7,000 Balance
At the Fed’s 22.36% average for accounts assessed interest, a $7,000 balance accrues about $130.43 a month in interest ($7,000 × 0.2236 ÷ 12). As an assumed comparison, the monthly interest at 27% is $157.50 and at 18% is $105.00. That’s $52.50 a month, or $630 a year, if the balance stayed the same.
Comparing Offers
My suggestion: if you carry a balance, compare the APR on your card with other offers, including credit unions, instead of assuming your current rate is the best you can get.
A Plan to Move the Number
If You Have Time Before a Big Purchase
- Pull your reports at AnnualCreditReport.com and check for errors. The CFPB explains how to dispute them.
- Pay balances down. myFICO says amounts owed is 30% of a FICO score, and that using a high percentage of your available credit can lower your score while using a low percentage can help.
- Make every payment on time, since payment history is the largest category. Autopay for at least the minimum can help.
- Think carefully before opening new accounts shortly before applying for a major loan. New credit is another scored category.
If You Need to Borrow Soon
- Compare offers from several lenders. In my view, the spread between offers can matter as much as your score.
- For a car loan, consider getting pre-approved before you shop so you know your rate before a dealer quotes one.
- For card debt, you can ask your issuer about a lower rate.
Free Reports and Shopping for Rates
The FTC says Equifax, Experian and TransUnion have permanently extended a program that lets you check your credit report at each agency once a week for free at AnnualCreditReport.com, and warns that other sites may charge you or be fraudulent.
It says to look for accounts or bankruptcies that aren’t yours and to act quickly, because the sooner you spot a mistake the sooner you can dispute it (FTC: Free weekly credit reports). On shopping around, the FTC’s credit score page says inquiries from multiple mortgage lenders in a short amount of time often count as just one inquiry (FTC: Credit scores).
It doesn’t give a number of days, and it doesn’t address auto loans, so ask each lender how it reports inquiries.
How Much Does a Rate Difference Add Up To? (Assumed Rates)
| Assumed loan | Rate A | Rate B | Extra per month | Extra interest |
|---|---|---|---|---|
| $300,000, 30 years | 6.0% | 7.0% | $197.26 | $71,012.12 |
| $40,000, 60 months | 6.5% | 16% | $190.08 | $11,404.58 |
Both rows repeat the calculations above, and the rates are assumed. The takeaway I’d draw is that comparing offers is worth the effort, because even a one-point difference compounds into thousands of dollars on a long loan.
Checking Your Score
The CFPB explains that checking your own credit is a soft inquiry. Hard inquiries come from applying for credit.
Matching Action to Your Situation
- “I’m about to apply for a mortgage.” → Get a quote, check your reports for errors and compare lenders.
- “I’m shopping for a car loan.” → Compare several offers, including a pre-approval.
- “I carry a card balance.” → Compare your APR with the Fed averages above and other offers.
- “I have time before I borrow.” → Focus on payment history and balances, the two largest categories.
Common Questions About This
How much can a better rate save on a mortgage? In my assumed example, a one-point difference was $71,012.12 over 30 years.
What is the average card rate? The Fed reports 22.36% for accounts assessed interest in August 2026.
Does checking my own score lower it? No. It’s a soft inquiry, per the CFPB.
Before Your Next Big Purchase
Check your reports, get quotes from more than one lender, and use the worked examples above to see what a rate difference costs in dollars.
This article offers general information and my own opinions, not financial, tax, or legal advice. The figures in worked examples are assumed. Laws, tax rules, and products change and can differ by location, so check current official sources and talk to a qualified professional about your own situation.
Sources:
- Federal Reserve: G.19 Consumer Credit
- myFICO: What’s in my credit score
- CFPB: What is a credit inquiry?
- CFPB: How do I dispute an error on my credit report?
- HUD: Loans
- FTC: Credit scores
- FTC: You now have permanent access to free weekly credit reports
Related reading: 6 Credit Score Myths That Are Quietly Costing You Money in 2026 and Crypto and Credit Score: What Nobody Tells You.