Very commonly, people with “mediocre” credit scores will not think that they need credit repair because their scores are still high enough to allow them to qualify for home loans, car loans, credit cards, and department store cards. By “mediocre” we mean average scores in the range of 670-720. These certainly are not “bad” scores, but there is just enough derogatory credit to take you out of the Tier One qualification.
Here are three situations where this will affect your wallet. (There are more than three, but these are the biggies.)
Buying a Car
Car dealers will be more than happy to sell you a car when your credit scores are in the high 600’s, but they’ll charge you more to do it. A $40,000 car loan with an interest rate around 7% will cost you over $2500 more during the term of the loan than would an interest rate a couple of percentage points lower. Of course, you’ll never know that you overpaid because the car dealership will not want to tell you that you just paid more for financing.
Leasing a Car
You might think that when you lease a car, credit doesn’t matter as much because you are not getting a car loan. Wrong! You are definitely qualifying for financing, even with a lease, and the same rules apply as for a purchase. Average credit scores pay more than excellent credit scores.
Refinancing Your Home
This is a biggie because most people will only see that the rate on their NEW loan is less than the rate on their OLD loan. However, the rate on that NEW loan could be even lower if your credit scores were above 740. Saving an additional 0.5% on your refi with excellent credit scores could save you as much as $50,000 in interest charges over the life of a $450,000, 30 year mortgage.
Pay a Little Bit Now or Pay a Lot More Later
It is easy to see how spending a few hundred dollars on credit repair now could save you thousands or even tens of thousands of dollars down the road by taking your credit scores from “mediocre” to “excellent”. Give us a call for a free consultation prior to making the next major financial decision or purchase. You’ll be glad you did!