Cost of Bad Credit 

You see it all the time. Bad credit? No credit? No problem. But whats the cost?

Lenders charge higher interest rates, usually three percentage points above what prime borrowers with good credit pay, plus thousands of dollars in fees. Unfortunately the economy is catching up with people, and is resulting in catastrophic debt overload which then leads to bad marks on a credit reports or even bankruptcy.

It is estimated that approximately 60 million Americans are negatively affected by derogatory information contained in their credit reports- that's a staggering figure. The cost of poor credit goes much deeper than just trying to qualify for a small computer loan or secured credit card. Your credit report reflects on you. Lenders, landlords, employers and even insurance companies view your credit worthiness by how well you manage and pay your debts.

Credit is a cost effective weapon to fight poverty and it serves as a vehicle in the overall well-being of the socioeconomic. Managing credit correctly can ensure financial well-being. Continual late payments, inaccuracies and errors reflect negatively on your character and limit your financial options. While we can see the importance of good credit, maybe you have not given much thought to how much your bad credit is costing you. You are being punished for your lacking credit record in almost everything you do. Your credit score determines your ability to borrow.

 

Consider this. Your credit reports decide just how much you will be charged in interest on any given loan, if you can even get a loan. Below, we have given you a few examples of the cost of your bad credit and how much the industry is charging you. Can you afford to continue on down this expensive road?

Car Financing

Car dealers can use errors on your credit report to charge you higher interest rates! You could be one of the more than 40 million people who are paying subprime rates for car financing. If your credit is impaired, you are paying much more for your loan then others.

Home Loans

While the impact of expensive auto financing can be detrimental, it is nothing compared to how much you can be paying for bad credit with a home loan. If your credit score falls below 640, you could be paying too much for a home loan or refinance. Not even considering the loan amount but only the savings based on your monthly payment, you can certainly visualize the effects of bad credit and just how unattainable it makes ever owning your own home! The difference in monthly payment and total interest paid is dramatic.