More and more of your everyday expenses are becoming influenced by whether or not you have a good credit score. The deposits you pay to start services like cable, internet, telephone, or utilities are higher if you have bad credit (if you have to pay them. Usually people with good credit don't have to). The interest rates and finance charges you can end up paying on car loans, mortgages, student loans, and credit cards may be significantly higer as well. Even your car insurance payments can be higher now if your credit score is low. How much is good credit really worth? You're about to find out...
How damaging is it if you don't have good credit, really? The answer will probably surprise you:
You could, over the process of your lifetime, lose hundreds of thousands or even millions of dollars if you don't have a good credit score.
Let's just use a simple payment like your car payment to show how this works. The interest rate on a car payment for someone with a good credit score can be very low, around 3% to 4% (as of this writing). On the other end of the example, people can pay upward of 18% or higher if they have bad credit or no credit at all.
For example, a $15,000 car loan at 4% for 4 years carries a $339 payment per month. The same car loan with a 15% interest rate is $417 a month. That's a difference of $78 a month, just because of your credit!
The real difference can be seen over time, however, with that $78 difference costing you $936 a year. Take it over 10 years, and it's $9,360 dollars. You literally lose the money to buy a nice used car every ten years just because of your credit.
Where the damage really comes in is over the long term. Were you to take that $78 payment over 40 years, covering all the vehicles you own from age 20 to 60, and now you're talking about a grand total of $37,440 dollars. And this doesn't even count the lost money from investing over time and the gains you can achieve over a lifetime.
A staggering amount of loss, all from a $78 difference in payment. But what if we were talking about hundreds of dollars a month?
Currently, the interest rate on a 30year fixed mortgage can be as low as 4.5% for someone with good credit. A home loan with bad credit: 9%. On a $150,000 loan that's a payment difference of $446 a month. Just the difference in payments alone without counting for the lost opportunity to invest over 40 years adds up to $214,080. That's a house or two, or a couple of college educations!!
The examples could continue forever, taking into consideration insurance payments, credit cards, etc. It's not hard to see that a good credit score can easily save you $700-$800 a month. Over the course of your lifetime, this difference can quite easily add up to hundreds of thousands or even millions of dollars!
The good news is that your credit score is something that you can learn how to control. If your credit isn't perfect, you can repair it by either learning how to repair it yourself, or seeking help from reputable credit repair professionals. And if you already have a great credit score, protecting it from the rising tide of identity theft is a smart move.
The bottom line: Educate yourself so you can take control of your credit score as fast as you can. It's worth a fortune to you and your family.
Author Resource:
This article has been abridged to fit the format of this website. For the complete, original article, including additional supporting information and resources, please click this link --> How Much is a Good Credit Score Really Worth?
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