You have no idea how much your credit is costing you.

Most people think that having good credit gets you approved, well, yes that’s true, but what most people don’t know is how much bad credit costs you–every month.

Here’s how much more you’ll pay each month for a home, your car, your credit cards, and more…

Again, I can’t stress this enough – this money is literally getting thrown away each month…picture walking outside, going to the ATM and taking out money, then stepping up to a trash can and tossing it in (I’m serious, and this should be serious for you).

Let’s talk home loans.

The annual percentage rate (APR) on a mortgage can vary by over 3.5% depending on your credit score. That may not seem like much, but it makes a huge impact on how much you pay over the lifespan of the loan.

To qualify for a decent mortgage, you typically need a credit score of 680 or higher. Here’s how much your payments will differ on a 30-year, fixed-rate $250,000 mortgage, with 10% down, and excellent credit compared to having a 620 score…

740 credit score or above:

APR: 4.125%
Total payment: $1,321

Same situation, but with a 620 score:

APR: 6.6%
Total payment: $1,667

Total cost of bad credit for just your home: $346 more per month…money wasted, every month.

How about your auto loan?

Again, it’s not about whether you get approved or not, we’re talking about how much more you’ll pay.

Important note: Your credit score will be different depending on what you’re applying for.  Yes, depending on who is pulling your credit (i.e. an auto loan lender, home loan lender, etc, versus your score from the reporting agencies, or a monitoring service like credit karma, or even us), your scores will often come up lower when applying through a lender.  (find out why here)

“Woah.  How am I supposed to know what my real score even is then?“

You don’t.

Not really.  You won’t know until you’re actually applying for something.  

So, if you got your score through us, the reporting agencies, or anywhere else but the actual lender themselves, you can almost always bet your score is appearing higher than it actually is.  

This means that if you think you’re sitting comfortable at a 684, or a 701, but the score was from anywhere but a lender, it’s likely 20-80+ points higher than it will actually be when you go to apply for a loan.  Unless your score came up soaring above 700, you can bet you’re not getting the best rate. 

We’ll pretend for a moment though that you show up at the dealer ship and your score is actually 720 or higher, which qualifies you for the lowest auto loan interest rates, compared to any score below 590.

Let’s go with a 60-month new car loan for $30,000 and using rate estimates…

720 or above:

APR: 2.79%
Monthly loan payment: $536

Same auto loan, but with below 590:

APR: 9.95
Monthly loan payment: $637

Total cost of bad credit for your car: $101 more per month (money you could be saving)

What about renting an apartment?

There are two ways bad credit can hurt you when you apply to rent an apartment.

First, the landlord may deny your application due to your credit. This will depend on both what credit score the landlord will accept and also the credit scores of any other applicants for the apartment. If another applicant has a higher credit score, odds are that the landlord will choose them.

If you are approved, you’ll likely need to pay a larger security deposit. The advertised security deposit is typically on approved credit, meaning you only qualify for that if your credit is good enough. With bad credit, your deposit may be double that amount or the equivalent of another month’s rent.

Credit cards

When it comes to credit cards, bad credit is crazy expensive.

First, if you have below 580, you’ll probably only qualify for a secured credit card.  It still helps build credit, but yeah, no fun.  With secured cards, you pay up front for whatever you plan to use on the card.  You’ll likely need to put up $100 to $200 just to open a secured credit card account.

Where bad credit will really cost you is in the missed opportunities. Many of the best credit cards offer sign-up bonuses worth hundreds of dollars and also earn rewards on all your spending. But you can only take advantage of those offers with good to excellent credit.

Now, let’s say you have bad credit and get approved for a credit card.  How much is this gonna cost you?

Let’s say you have $10,000 in credit card debt.  

With good credit, you’ll pay around 9% interest.  With bad credit, you might be looking at 22%.  

This means the monthly payment for your credit card–at the minimum–would be $175 if you have good credit, and a whopping $284 if you have bad credit. 

You credit card debt ends up costing you $108 more every single month!