The Cost of Poor Credit
Poor credit is a burden that stays with you for years and years. So what does poor credit really cost? How does poor credit affect your finances? Let's explore this topic fully in the following article.
How Poor Credit Affects You
1. Unfavorable credit offers - Having bad credit means that you will never be target for high-quality credit cards or balance transfer options which could significantly reduce the cost of carrying debt. Also, you'll never have access to rewards offers or benefits that other, higher-credit borrowers would receive.
2. Employment - Did you know that many employers use credit scores as a way to find good job candidates? Yes, your credit score will affect the jobs you can find, especially now that employers can choose to be picky when finding new hires. A lower credit score has been statistically proven to be correlated with employee theft, tardiness, and a greater number of sick days.
3. Insurance - Having a low credit score will automatically put you in a higher risk pool of insurance shoppers. A low credit score is correlated with a higher number of claims, as well as increased fraud among insurance buyers. Naturally, insurance companies compensate with additional risk by charging higher rates to people who have bad or poor credit.
4. Interest - You will pay a higher interest rate for any loan you take out, from credit cards to mortgages. In the case of a mortgage, the difference between good and bad credit often totals to tens of thousands of dollars over the life of the loan. That is to say that a person with poor credit would for his or her home plus tens of thousands of dollars in extra interest he or she would never pay with good credit. Look at it this way: for the amount that a person with poor credit spends in interest, a person with good credit saves enough to buy a new luxury automobile on a $150,000 home purchase.
