Good Credit Pays in More Ways than One
Everyone knows that saving for retirement is critical. However, many people may not be aware that a higher credit score can be an important component of an investment strategy and a sizable contributor to a nest egg.
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  • Mortgage rates can vary substantially depending on a borrower’s credit rating—often determined by a FICO score, which does not take into account wealth or salary.
  • That means borrowers with good credit may have substantially lower mortgage payments. In the example above, the mortgage payment savings plus the investments from those savings, invested annually, can generate over a half million dollars.*

  • For larger mortgages, the results can be even more dramatic.

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*Based on payment savings on a 30-year $500,000 mortgage, and reinvestment over life of mortgage with returns of 7% annually.

A FICO score is a score created by the Fair Isaac Corporation. Lenders use borrowers’ FICO scores along with other details on borrowers’ credit reports to assess credit risk and determine whether to extend credit. FICO scores take into account various factors in five areas to determine credit worthiness: payment history, current level of indebtedness, types of credit used, length of credit history and new credit accounts.

The views expressed are the views of Fred Alger Management, Inc. as of February 2017. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security or any funds managed by Fred Alger Management, Inc. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. 

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Fred Alger & Company, Incorporated 360 Park Avenue South, New York, NY 10010 /

800.305.8547 (Retail) / 212.806.8869 (Institutional)