Contact Us

How Much Money Will a Bad Credit Score Cost You? — Dollars and Sense

Joe Raedle, Getty Images

Savvy consumers know having a higher credit score means getting a lower interest rate and paying less over the life of a loan — but how much less?

FICO scores — the gold standard for credit worthiness — range from 300 to 850, and generally, people with a score below 720 have a harder time being approved for loans. And even if they do get them, those borrowers typically wind up with higher interest rates.

Currently, almost half of consumers have a FICO score below 700, and nearly a third have scores in the 550 to 699 range. So how does that shake down when it’s time to write those monthly payment checks?

Here’s an example: people with at least a 740 score pay an average of 3.2 percent interest on new car loans. When they finance $10,000 over five years at that rate, their monthly payments will be about $181, with roughly $860 in interest paid over the life of the loan.

But if your score is below 680, you could be dinged with a 12.5 percent interest rate, which would make your monthly payments around $227. That may not sound like much of a difference, but by the time you’re done paying off that $10,000 in five years, you’ll shell out a whopping $3,620 in interest — an extra $2,760 compared to the borrower with pristine credit.

For mortgages, it’s even worse. Those with scores between 620 and 639 will pay thousands more every year in interest — assuming they can get a loan at all.


Best of KLAW 101

Recommended For You

Best of the Web

Leave a Comment

It appears that you already have an account created within our VIP network of sites on . To keep your personal information safe, we need to verify that it's really you. To activate your account, please confirm your password. When you have confirmed your password, you will be able to log in through Facebook on both sites.

Forgot your password?

*Please note that your prizes and activities will not be shared between programs within our VIP network.

It appears that you already have an account on this site associated with . To connect your existing account just click on the account activation button below. You will maintain your existing VIP profile. After you do this, you will be able to always log in to using your original account information.

*Please note that your prizes and activities will not be shared between programs within our VIP network.

Please fill out the information below to help us provide you a better experience.

(Forgot your password?)

Not a member? Sign up here

Sign up for KLUB KLAW quickly by connecting your Facebook account. It's just as secure and no password to remember!

Sign up to have exclusive KLUB KLAW contests, events, coupons, presales, and much more delivered to you for FREE.