How Bad Credit Affects You

Few things can have a more devastating effect on your lifestyle than a low credit score. A low credit score can cost you hundreds or even thousands of dollars per month. In the following sections, we will outline how having bad credit can result in higher financing rates and more money spent over time when you attempt to obtain common types of credit.

Credit Cards

Most prime credit cards are entirely out of reach to consumers with bad credit. And the few credit cards that are available to them (known as "sub-prime" cards) typically require exorbitant setup fees or recurring monthly fees, offer very low credit lines, often require cash deposits, and, in most cases do not even report your positive credit activity to the credit bureaus, so they cannot help you improve your credit.

Automobile Financing

If you are making payments on a car, you are probably paying between $5,000 and $9,000 more in financing charges over time for having bad credit. This added interest shows up every month in a higher payment. Take a look. $20,000 car paid over 5 years:

Home Mortgage

Nothing compares to the cost of bad credit when you are attempting to purchase a home. A home with a sale price of $100,000 can cost between $50,000 and $130,000 more over the life of the loan if you have bad credit.

Obviously, bad credit can make your payments for necessary items so high that they become unaffordable. It is to your advantage to clear your credit as much as humanly possible before you attempt to make a large purchase. With the help of a credit repair service such as Lexington Law, you can improve your credit drastically in just a few months.