How your Credit Score May be Stealing your Money
Burglars and purse snatchers have nothing on your credit score! A low credit score can be stealing money right out of your pocket every month, in terms of your mortgage, car, and credit card loans. This can add up over time to hundreds of thousands of dollars.
Let's take a look at how this breaks down:
The Mortgage loans: For the sake of the argument, let us say you have a 650 credit score and you buy a $200,000 house with a 30 year fixed rate loan. You are going to have to finance it at a rate 1-2% higher than the person who is rocking a 750 credit score. Over the course of 30 years (360 payments) this difference can add up to be around a whopping $49,000!
The Auto Loans: the average consumer in the United States trades cars every 5 years. Based on this estimate, a person who buys a $25,000 car with a 650 credit score will pay approximately $5400 more for EACH CAR than the person with a 750 score.
The Credit cards: a person with a 650 score has probably had some late payments on occasion and may have maxed out their credit cards. As a result, they will not get the great terms and plentiful options that a person with a higher score will enjoy. The average household carries $7300 in credit card debt (Yikes!). If we assume this amount, a person with the 650 credit score will pay $552 more in interest per year than a person with the 750 credit score.
Gulp.
The Result: So, if you have a 650 credit score, the following numbers are how much your credit score will steal from you over the course of 40 years time:
Mortgage: $49,000
Auto: $43,000
Credit Cards: $22,000
Total amount the 650 credit score has stolen: $114,000
The figure would be much larger if this money had been invested in a mutual fund. At a 6% rate, this amount of money would have grown to about half a million dollars.
Remember, protect yourself! Lock your doors, lock your windows, don't talk to strangers, and keep that credit score high!
Coming soon! Tips on some easy steps to take to make sure you have a top notch credit score.
Questions and Answers
You might wonder what's the fastest way to raise my credit score?. The answer is only one - How much do you want to raise it? The proven techniques to fix credit score have laid out some strategy depends on how much you would like to raise your credit score. For example, if you wish to increase your score from 580 to 650 then your strategy will be very different from someone wanting to go from 670 to 725.
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