Host: How will a poor record affect the financial choices I have today?
Vikki Frank: Well, poor credit record can actually have an incredibly significant financial impact on anybody’s lives. On somebody with the poor score low and they’re paying over $250,000 in their lifetime more an interest payments and fees than somebody with the good credit score.
Let’s waive that down to make it feel like you can understand that. Somebody who has a $250.00 or $300,000.00 mortgage will actually spend %250,000.00 more in interest payments if they have a score of a 550 versus a 750, and I’m talking about FICO scores there. So 200 points different can lead to 250,000.00 in the whole mortgage. That’s big dollars.
In addition to just access to credit that leads to home ownership and education and starting up a small business, credit report and credit scores actually have much broader impact. It can impact your employment options. A lot of employers are looking at credit reports. It can look at whether or not and how much you’re paying for insurance and other utilities.
Most importantly, credit and having good credit or having bad credit really talks about the speed and the efficiency for which you can access credit. A lot of the main stream financial institutions offer their safe affordable interest rates are doing that because they can now use automated underwriting systems. They give some quick access to credit scores and credit reports which enables them to make a quick decision.
But people who have bad credit, they are either going to be in a position or they have to go a lot of information to gather, something that lenders and borrowers often do not have time for.
The other option is going to alternative lenders. People who charge a lot more for the cost of credit and paying a lot more a car dealerships and they pay their lenders than they would from the main stream financial institution.
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