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A large purchase like buying a home or car can be daunting. Not only do you want to find the best fit for your needs and wants, but securing optimal financing for either transaction is a task in of itself. A huge factor in securing financing for these purchases has to do with where your credit score currently sits.
Regardless of if your credit is perfect or needs improvement, a credit monitoring service can give you real-time information to see the ups and downs of your credit score, and alert you of any fraudulent activity.
Select covers the reasons why you should consider using a credit monitoring service if you’re planning on buying a car or home this year.
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Why you should use a credit monitoring service regularly if you’re planning a car or home purchase
1. Better credit means lower interest rates, and bigger savings
It’s not a secret that having a better credit score can help you qualify for better financing opportunities. And better financing means you will spend less on interest.
For example, the Federal Reserve reports that in Nov. 2021, the average car loan was $35,284 with a 4.5% interest rate and repayment period of 67 months. This means the average consumer is paying $4,683 in interest over 5 and a half years, along with nearly no chance for the car to appreciate in value, making it a pretty bad investment. However, if you lowered the interest rate to 3%, the total interest paid would fall to $3,081.
As for homes, it makes a more dramatic difference. In Q3 2021, the average home price was $453,300, and the average interest rate across the same quarter was 2.87%. On a 30-year-fixed-rate mortgage, the total interest paid would be $234,707. If you have excellent credit and have a solid down payment, a 2.5% interest rate would give you a total of $191,489 in interest over 30 years— a savings of over $43,000.
By using a credit monitoring service, you can quickly determine your credit score and find out what improvements you may need to make to get the best interest rates possible. However, this needs to be done far in advance of your purchase, and then as you make improvements to score, you can shop around to get the best rate.