The Cost of Bad Credit
Everyday I have the opportunity to talk to prospective clients who are considering making an investment in hiring my company to help them restore their damaged credit. Most of these customers have a goal of purchasing a new home, hopefully this next spring or summer.
Part of these conversations, of course, is about what it “costs” to have a professional assist them in restoring their credit. I explain that our costs are relatively moderate, and in addition they are budgeted out over the course of the work we perform.
Indeed, once the process of restoring your credit with my company, Phoenix Credit Consultants, is successfully completed, it doesn't result in a "cost" you at all - once your credit is restored, it pays for itself.
How is that possible?
Stop and consider the things in your life that cost more if your credit score is low:
Your Mortgage Interest Rate-A typical mortgage is a thirty year loan. That means you will make 360 monthly payments on that mortgage if you don’t sell the home or refinance the loan. If a high interest rate results in you paying as little as an additional $100 per month on the mortgage, it is going to cost you $36,000.00 over the course of the loan!
Your Auto Liability Insurance Premium-Insurance agents who refer their customers to me for help explain that a poor credit score increases the premium that people pay for liability insurance, frequently by as much as $500.00 per year! That’s a cost that you incur every single year that your credit remains subprime. Planning on driving for at least the next twenty years? That unimproved credit score is going to cost you another $10,000 during that time!
Your Homeowner's Insurance Premium-An “insurance score”, similar to the one that is used to compute your car insurance premium, is used in determining your homeowner’s liability insurance premium. If that increase is as little as $50 per month, that’s an extra $600 per year. Planning on owning a home for the next twenty years? Your unimproved, subprime credit score is going to cost you another $12,000 during that time!
The Amount of Interest that you pay on a Car Loan-According to Kelley Blue Book, the average price of a new car sold in the United States in 2017 was $33,560.
I shopped around a bit for auto loans and found that someone with a credit score above 720 could expect to pay around 3.2% on an auto loan these days. Someone with a credit score in the low 600s or lower, on the other hand, is going to pay at least 12.9% in interest.
What does that equate to in dollars? On a four year car loan, the person who has a loan at 2.9% will pay a total of $2,238.31 in interest on their loan. A person with a 12.9% interest rate will pay $9,575.97 over that same four year period. The difference? $7,337.66 more! The person with subprime credit pays over $7,000 more for the exact same car!
The Interest Rate You Pay on Credit Cards-According to the Federal Reserve, during the first quarter of 2017, the average APR (Annual Percentage Rate) for all credit card accounts at all reported banks was 12.54 percent. On the other hand, credit cards aimed at people who need to work on their credit come with some pretty hefty APRs, often in the neighborhood of 24 percent, or almost twice as much.
Obviously, how much this higher interest rate costs is dependent on how much is put on the credit card. You can do the math, though, if your interest rate is higher using the card is going to cost you more!
ALL of these things are less expensive for people with good credit scores than they are for people with lower scores.
So... think about it. How much money is it costing you to ignore your poor credit score?
Thousands of Dollars? Tens of Thousands of Dollars?
Call us today. (314) 429-2040.
Stop burning your hard earned money. Make an investment in getting started on the path towards a better credit score-TODAY!