The True Cost of Credit
Greg Vogel | October 28, 2009Here are just 2 examples of the cost of bad credit: a mortgage loan and an auto loan:
30 Yr. Fixed Mortgage
|
FICO® score |
APR |
Monthly payment * |
|
760-850 |
4.688% |
$1,554 |
|
700-759 |
4.910% |
$1,594 |
|
680-699 |
5.087% |
$1,626 |
|
660-679 |
5.301% |
$1,666 |
|
640-659 |
5.731% |
$1,747 |
|
620-639 |
6.277% |
$1,852 |
*National Average, Loan Amount: $300,000
36 Month Auto Loan
|
FICO® score |
APR |
Monthly payment * |
|
720-850 |
6.129% |
$762 |
|
690-719 |
7.678% |
$780 |
|
660-689 |
9.668% |
$803 |
|
620-659 |
13.362% |
$847 |
|
590-619 |
18.141% |
$906 |
|
500-589 |
18.682% |
$912 |
*National Average, Loan Amount: $25,000
So, for someone with a 620 FICO score vs. someone with a 760 FICO score, they are paying $383/month MORE, which is $4,596/year!
These are just 2 examples of bad credit severely affecting payments. If you add in credit card APR’s, insurance rates, and other loans, the costs are even greater! Not to mention most landlords and employers are checking credit before accepting new people too!
