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Several consumer surveys have shown that 9 out of 10 people have no idea what their credit score is. This can be a dangerous state of affairs that can mean that your credit score itself is costing you a lot of your hard earned money.
It is no secret that having a credit score that is ranked low will create higher interest rates from lenders because you are considered a credit risk. Most people have only a vague understanding of this and are surprised by the often devastating effects this can cause.
For instance, a $200,000 home that is on a 30 year fixed mortgage at 8% interest instead of 6% interest will have a dramatic effect. The 2% higher interest rate due to low credit scores will cost you a total of $96,934.11 over the term of the loan! Consider how many years of work that equates to in paying just that 2% difference.
There are other places in life that a low credit score will actually increase your cost of living on a yearly basis. Not only will you be paying more for your home loan, car loan and credit cards a low credit score often cause you to pay extra in the following areas:
1) AUTO INSURANCE. The vast majority of the 100 largest personal auto insurers use a person’s credit information to underwrite a new client. This snippet is based on a 2001 study that was conducted by Conning
j stromsteen has many years expertise in the finance, real estate, and insurance industry. she contributes to various websites such as first time home buyer where you can find detailed information on getting a first time home buyers loan .