Cost of Bad Credit
Updated: Apr 2, 2020
Bad credit – two of the most dreaded words in the English language. Bad credit can really take a toll on a person’s life – and not in a good way. In fact, the effects can be worse than one might think.
Having bad credit can make it next to impossible to attain a new car, an apartment, a personal loan or even a home. Even something as simple as getting a new credit card will be out of the question for a consumer with a negative credit history.
The most widely used credit scores are FICO® scores, the credit scores created by Fair Isaac Corporation. Lenders can buy FICO® scores from all three major credit reporting agencies, Equifax, Experian and TransUnion. FICO® scores range from 300-850 – higher is better.
How you pay your bills and debt accumulation are the two most important factors in calculating your credit score. Your FICO® Credit Score is weighted as follows.
Even if you’ve been fortunate enough to be able to purchase a new home or a car with bad credit, you’re still being punished in some way for your low credit score. Usually, the penalty you’ll receive for bad credit is a higher interest rate than you would have received normally.