The high interest rates you pay due to bad credit mean that you are burning through a lot of extra cash every month. This happens when you have a low credit score or are buried in debt. Since the economy is still in a tight situation, lenders are very careful when lending money. So if you manage to obtain financing but your credit score is in a bad shape, you will surely be hit with a higher interest rate.
Who would you rather be?
An individual with a FICO credit score of 720 who purchases a $20,000 car on a 60-month loan will probably be able to score a manageable 4% interest rate. On the other hand, another individual with a FICO credit score of under 650 purchasing a similar car on a 60-month loan might pay around 18% in interest. The difference in interest payments over the course of the loan would be $8,672.40. Again: Who would you rather be?
The effects of bad credit
Based on the above example, if both individuals are earning the same amount of salary, then the second individual is not getting the same overall quality of life as the first individual. Overtime this will affect his family, his well-being, and his self-esteem. And people who are burdened with a bad credit rating will have difficulty competing in an economy that values an excellent credit rating. That is why cleaning up your credit is very important.
Fixing bad credit
It is very important to monitor your credit reports to ensure that there are no inaccuracies. If you do discover any inaccurate items, it is very important to be proactive in getting them removed from your credit report. The services of a good credit repair company can help to facilitate this process. CRE Credit Services is the proven leader in the field.
Pay your bills on time and keep your debt as low as possible!