The #1 New Year’s Resolution to save Money in 2016
Monday, Jan 4, 16
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It’s that time of year again where everyone is going to start a new year and resolve to get in shape, save money, be a better person or some other improvement in their lives.
Millions of consumers fail to understand how a higher credit score can help them save money. Low credit scores often lead to denials or higher interest rates. Denials and higher interest rates cost consumers millions of dollars each year. Let’s take a look at why.
Top 3 ways credit denials prevent consumers from saving money:
- Mortgage Denials: Everyday millions of consumers get denied attempting to purchase a home due to low credit scores. Many of these consumers have to continue to pay rent instead of building equity by paying for their own home.
- Auto Denials: Everyday millions of consumers get denied attempting to purchase a reliable automobile. Without a reliable automobile, many of these consumers can’t get jobs costing them the loss of income.
- Student Loan Denials: Everyday millions of consumers get denied attempting to get approved for Student Loans so they can continue their education. Higher education generally leads to higher incomes.
Top 3 ways higher interest rates prevent consumers from saving money:
- Low credit scores lead to higher interest rates on automobile loans. As an example, a consumer who pays 14.99% instead of 1.99% on a $25,000 loan for 6 years pays an additional $11,508 in interest. That’s right, $11,508 more in interest just due to a low credit score.
- Lower credit scores can lead to higher mortgage rates. As an example, a consumer who pays 4.5% instead of 4% interest on a 30 year $150,000 mortgage pays an extra $15,807 more in interest. That’s right; just a ½% higher interest rate comes to $15,807 more in interest due to a low credit score.
- Low credit scores can lead consumers to subprime unsecured loans instead of traditional bank loans. As an example, millions of consumers with low credit scores seek installment loans from Indian Reserve type companies due to their easy qualifications. I recently reviewed one such loan where if a consumer only borrowed $500 for approximately 14 months they would pay $4,117 in interest. This loan comes with a staggering 766% annual percentage rate. The 766% is not a type-o. The sad truth is millions of consumers take these types of loans only making their financial situation worse.
Now you know how low credit scores prevent consumers from saving money. If you find yourself with a low credit score, you may want to add a New Year’s resolution to improve your credit score so you can start saving money this year. Curemyscore.com’s blog offers free tips on how to improve a credit score and they also offer professional credit improvement help.
Happy New Year!
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About the Author
Credit Reporting / Scoring Expert, Chris McConville is the President of Credit Education at CureMyScore.com and founder of myexpertcreditwitness.com where he works as an Expert Credit Witness in both Federal and State Court. With working in the credit and mortgage fields since 1991, he’s dedicated to sharing his knowledge to educate consumers.
