The Cost of Bad Credit
Your credit score is the determining factor in the final interest rate you recieve. Keep this front and center in your thoughts if you are considering buying a home car or opening a line of credit.
Credit Cards
With poor credit, receiving a prime rate on a credit card is just about impossible. The penalties for only qualifying for a "sub -prime " credit card are: set-up fees, recurring monthly fees, low lines of credit. Some of these cards may not evenreport positive credit history to the 3 major credit bureaus!
Find out your credit score : free credit score
Auto Financing
You could be paying an extra $4000-$8000 on your auto loan, just for having a poor credit score. The higher interest rate cause the payments to increase , really adding up.
| *$20,000 car paid over 5 years: | |||
| CREDIT STATUS | RATE | PAYMENT | EXTRA COST |
| PERFECT | 10% | $424.94 | $0.00 |
| MILDLY DAMAGED | 14% | $465.37 | $4,722.54 |
| DAMAGED | 20% | $529.88 | $8,593.30 |
Home Mortgage
If you though the auto loan with poor credit was bad, look at the home mortgage with damaged credit. You can easily spend an excess of $50,000 to $130,000 dollars extra over the length of the mortgage.
Find out your credit score : free credit score
| *IMPACT ON HOME LOAN - VARYING CREDIT STATUS/ $100,000 home paid over 30 years: : | |||
| CREDIT STATUS | RATE | PAYMENT | EXTRA COST |
| PERFECT | 7% | $655 | $0.00 |
| MILDLY DAMAGED | 9% | $804 | $50,155 |
| DAMAGED | 12% | $1028 | $130,791 |
Supreme Credit Tip - Never miss payments
Never be late on credit card or mortgage payments - plain and simple. You may need to borrow short term funds at a high rate but do it anyway. In the long run it's MUCH better option. You will end up saving your credit score which leads to lower interest rates - which leads to lower payments - you can do it!
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