Your Credit

The Cost of Not Having A Good Credit Score

The lack of a good credit score can cost you tens of thousands or even hundreds of thousands of dollars over a lifetime. Higher interest rates on credit cards and auto loans, higher interest rates and points on home loans, and higher down payments and deposits are just a few of the ways. But you may be paying higher auto insurance premiums, or you may even be denied a job or even simply a mobile phone due to the lack of a good credit score.

Your credit history and credit score are like vital signs. They are being monitored and checked each time you try to buy something on credit. A potential creditor is going to “pull” your credit report to make sure you fit their criteria as a borrower before they extend you credit and approve a purchase. Even if you are approved for that purchase you may not be getting the best interest rate and ultimately pay much more for that item in the long run.

A good example of this is taking out a loan in the amount of $25,000 to buy a new car on a 60-month term. An individual with a good credit score of over 720 can get an interest rate of less than 4% and perhaps take advantage of 0% offers from auto manufacturers. However, an individual with a bad credit history and credit score of less than 589 may pay 17% – 25% or more. The difference in a monthly payment can be more than $175 a month making that car cost over $10,000 more for the borrower with the lower credit score.

Most people are not aware that credit scores can be used in determining premiums for auto insurance. According to, “A consumer with a bad credit history is going to pay 20 to 50 percent more in auto insurance premiums than a person who has good credit.”

According to the National Conference of State Legislatures, “The total number of states that limit employers’ use of credit information in employment is now eight: California, Connecticut, Hawaii, Illinois, Maryland, Oregon, Vermont , and Washington.” The use of your credit information in determining employment status is only limited in these states and not necessarily completely restricted. There is pending legislation in 19 other states to also limit the use of an individual’s credit information in determining employment status. However, it is currently allowed in 42 states. Therefore you may be denied a job because of a bad credit history.

The good news is that no matter the condition of your credit history you can remove inaccurate, obsolete, or erroneous items from your credit report and increase your credit score to avoid the embarrassment of being denied a loan, and more importantly get lower interest rates and fees when you do get approved.

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Please feel free to contact us with any credit related questions you may have; we are always happy to help.