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Of course, you know that a lower than average credit score will make everything in the world in the Financial World "MORE" Expensive, because lenders/creditors view you as a high credit risk. Therefore you have higher interest rates on things like a home, a car, credit cards, etc... Even Though this is considered Common Knowledge, the Devastating Affects are Unknown by many.
Let's say you purchase a $200,000 home on a 30 year interest of 8% instead of 6%, because of your credit score. Are you aware that 2% difference is going to end up costing you "$96,934.11" over the term of your loan? (Now how much longer would you have to work to pay off an additional $96,934.11?). If you do the math, and break that down over 30 years, that's $3,231.17 you're paying per year, which is $269.26 per month. And an amazing statistic shows that over 50% of the Bankruptcies that are filed each year could be eliminated if families only had an extra $300 per month.
Very few talk about how the other areas of your life are affected by a low credit score, and how it can increase your cost of living. other than Credit Cards, Cars, Homes, the following areas are also affected.
1). "Auto Insurance"- According to a 2001 study by Conning & Co. (an insurance-research and asset management firm) as many as 92% of the 100 largest personal automobile insurers us credit information to underwrite new business.
2). "Home Owners Insurance" - It's believed that many Insurance Companies see a correlation between low credit Scores and increased property insurance claims. Therefore a low score will result in higher rates.
3). "Health and Life Insurance" - People who can't pay their monthly insurance premiums pass along that increased cost to the insurance company who gets stuck with the bill which results as a loss for the company. And since people who pay without lapse are more profitable, it's felt by many that a low credit score now even affects a monthly life and/or health insurance premium negatively.
4). "Employment" - Employment is one of the more shocking areas where a low credit score will cost you. According to a 1998 survey conducted by the Society of Human Resource Management, it's estimated as many as 42% of employers now do credit checks on applicants before hiring them. While many employers claim they only use it to "verify" the information on the application (previous addresses, previous employers, etc...) You can easily assume they're taking the libety "have a peek" at how you handle your financial affairs as well.
A study was conducted by the Public Research Interest Group (PIRG) in 2004, and are you aware that as many as 79% of all Credit Reports contain errors? And 25% of which are serious enough to cause a denial of credit?
And that's all the more troubling in light of the Increasing impact a bad credit report can have, says Ed Mierzwinski, Director of PIRG's Consumer Program. "It's outrageous that the credit bureaus are claiming their credit scores are accurate enough to take people's lives and screw with them like this."
Category: Credit ReportIs Your Credit Costing You A Fortune? was written by:Author:Justin FosterAdded: Tue, 01 Apr 2008 22:33:52 -0400 This Article Has Been Read 167 times View all Justin Foster's articlesAbout the Author: Justin Foster www.mybestcredit.net |
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