How can Bad Credit or a Low Credit Score Affect My Life?

The costs associated with a low credit score are difficult to calculate precisely. However, a look at the savings and losses from bad credit reveals significant penalties.

On the bright side, even a modest increase to your credit score can save you thousands in interest on your car loan, home mortgage, or credit card APR rates.

So, how does a low credit score affect you? Bad credit costs you money. Lots of it!

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Credit Repair FAQ - The Rest of the Story...

Bad credit is expensive. A low credit score on a home mortgage can cost hundreds of "points" in interest penalties alone.

For example, say you have an outstanding mortgage of $150,000 - the chart below shows what bad credit means for your interest rates and the ultimate cost of your home equity acquisition. A low credit score can literally double the cost of your home!

Bad Credit - Auto Loans and Vehicle Financing

Assume you have an outstanding car loan for $15,000. Quick math illustrates the cost of a low credit score. Bad credit can cost you thousands of dollars even on an auto loan!

Bad Credit - Credit Card Interest and Monthly Payments

Let's assume you are carrying $8,000 in credit card debt. Additionally, let's assume that you budget $175/month to service this debt. Below are the results of bad credit, average credit, and excellent credit scores on your payment "sundown" and amounts.

As shown, a consumer with bad credit will pay more with higher interest rates, and at a high APR, consumers with bad credit can make minimum payments and yet remain in debt for decades. Bad credit means higher interest rates, period.

Examples like those above illustrate the hidden costs of attempting a major purchase with bad credit. Even one percent in higher interest rates can cost you tens or hundreds of thousands more in interest payments alone.

Optimizing your credit profile by disputing inaccurate report data, especially before making a major purchase, is extremely important to help you get the financing you deserve.