5 Ways That Average Credit Can Kill Your Financial Future
Consider this all-too-common situation…
Perhaps you previously had good or even great credit, but the recent financial downturn caused a loss of income in your household, and this forced you to skip or be late on a credit card or two, a mortgage payment, or a car payment. Maybe now you have recovered and caught up on those payments, but those derogatory items are still there dragging your scores down into the “fair” range. Your credit isn’t horrible or rock bottom, it’s just a little bit wounded.
We see this quite a bit – people who previously had really good credit, but a temporary loss in income resulted in a few late payments.
If you find yourself in this situation, you basically have two options:
- Do nothing
- Get your credit fixed
If you do nothing, your credit will stay in that “average” range for at least another 12-24 months, probably longer. You can look forward to these 5 things killing your wallet…
You’ll pay more for home financing. Those great home loan rates right now in the 2-3% range aren’t going to be available to you. You only get those if you have top tier credit with no negative items in the past few years.
You’ll pay more for your next car. When you see a commercial advertising 0.9% financing or maybe even 0% financing on a new car, you can ignore those. They only give those rates to people with scores over 740 or even over 760. With recent late payments, credit scores will easily dip into the 600’s. Unless you pay cash for that new car, you’ll definitely pay more than the guy who walks in with perfect credit.
You may get denied for a home loan or refinance. If any of those late payments were mortgage lates within the last 24 months, many lenders will deny you financing on that factor alone. If you do get approved for a home loan, plan on much higher interest rates.
Credit card companies will prey on you. There’s nothing that a credit card company loves more than a customer with “average” credit. They will bump the interest rate on the card up into the 20-25% range and then hope that you carry a balance every month.
You’ll pay more for ANY loan. Maybe you want to finance solar panels for your home, take out a home equity line of credit, borrow money for a home renovation, or finance new bedroom furniture… plan on higher interest rates and higher payments for ALL of those things.
These 5 scenarios alone could cost you thousands of dollars every year just in interest charges. Without taking any action, your scores will eventually crawl back up (if you’re perfect going forward), but the climb back to the top could take years.
But what happens if you decide to get your credit repaired instead?
When our team goes to work for you, you’ll end up paying a few hundred dollars over the course of the next 3-6 months, but you’ll come out of it with scores that have escalated FAR faster than if you had done nothing. 6-12 months from now you’ll be in a position to get better home loan rates, better car rates, and better credit card offers.
Bottom line… you’ve spent under $1000 in order to save thou$and$ of dollars in interest and fees that lenders love to slap on folks with average credit.
Don’t let the big banks take money out of your pocket! Get your credit fixed and take back possession of your financial future. Call our office for details and get all of your questions answered.