Awareness is GOLDEN and many Good People are unaware of how much BAD CREDIT is actually costing them.
Would you believe, that over a 30 year time period, in so many cases, BAD CREDIT may be costing a person over ONE MILLION DOLLARS?!
That’s like tossing money into the wind!
OK… I know, this claim requires some explanation, so, here we go…
If you were to take a person with BAD CREDIT, and take a person with GOOD CREDIT, and compare their credit life span over 30 years of using credit cards, car loans, mortgages, etc., the additional money that the person with BAD CREDIT pays in interest, can be enormous.
Let me shine some more light on my claim:
(Now, there will be many variables to my explanation, but for the sake of keeping things simple and to illuminate my point, I will be using simple and straightforward examples)
Mortgage: The average price for a home in January of 2022 was $215,300.
A 30-year mortgage on a $300,000 loan for a person with a GOOD CREDIT SCORE (760-850) cost 6.346% APR.
Now, a person with a BAD CREDIT SCORE (500-579) that same house would cost 10.152% APR.
This means that the person with a GOOD CREDIT SCORE pays $1,866 in a monthly payment, while the person with a BAD CREDIT SCORE would pay $2,666 in a monthly payment.
This is an additional $800 per month, paid by the person with BAD CREDIT, for the same house, which adds up to $288,000 over a thirty (30) year mortgage.
Auto loan: The average car loan in 2022, as per Edmunds.com, was $24,864.
A person with a GOOD CREDIT SCORE (720-850) may get approved for an auto loan at 7.221% APR.
A person with a BAD CREDIT SCORE (500-589) may get approved for an auto loan at 14.909% APR.
This will cost the person with BAD CREDIT $88 more per month for the same car, which over a three year auto loan, adds up to $3,168.
The average person keeps their car for 4.5 years.
This would mean that the average person finances a new car every five years, which adds up to $19,008 in additional costs for the person with BAD CREDIT over 30 years.
Credit Cards: The average credit card balance is $2,200.
A person with a GOOD CREDIT SCORE (720-850) may pay a rate of 9% interest.
A person with a BAD CREDIT SCORE (500-589) may pay a rate of 20% interest.
Over a 30 year period the person with BAD CREDIT would have paid an additional $7,260.
OK… we can slow it down right here.
If we were to add up the additional interest payments that the person with BAD CREDIT paid over a 30 year period, it would look something like this:
Mortgage: $288,000
Auto Loans: $19,008
Credit Cards: $7,260
TOTAL: $314,268
TOTAL $314,268 / 30 Years = $10,475.60 / 12 Months = $872.97 per month.
Now, if the person with BAD CREDIT, would have had GOOD CREDIT, this person would have been in a position to take this $872.97 per month, and invest this money every month, in something as simple as an Index Fund, let’s say the S&P 500, which averages 8% percent returns per year, then this person with GOOD CREDIT would have saved-and-earned well over ONE MILLION DOLLARS!
THIS is an example of what is called LOST INTEREST.
And we haven’t even touched on how much money would be LOST on auto, health, and homeowners insurance, for having BAD CREDIT, and not to mention the COST of getting denied for a higher paying job, or the COST of getting bypassed for a promotion at work.
Look, I do not want to come across as harsh… but this is LIFE… this is REAL…
My goal here is to shine a bright light on the grave importance of building GOOD CREDIT and protecting YOUR GOOD CREDIT.
No matter where you are today, you have the power to make your money troubles go away, and create a better tomorrow… for YOU and Your Family.