A few years ago, few people knew that there was a special rating of each person, which shows how responsibly his owner treats his debts and finances in general. Banks and credit organizations first look at this document before deciding whether to grant a loan to a potential borrower. Many watch their scoring and try to improve it. And some even value it in monetary terms. So how much is the credit history of each of us?
It is important to understand that a credit score can affect not only the loan, but also its value. The higher your score, the greater the amount of credit that you can approve and the lower the rate will be for this loan. In addition, your device may also depend on CI, and even wages.
How much is a credit history: examples
Your credit score directly affects how much you will pay each month if you decide on:
– purchase of a house or car;
– financing education;
– Or the time will come to pay off the debt.
If your credit history is bad, then it will be more difficult:
– get a loan for a major purchase;
– get a decent job in a big company;
– open a checking account.
Very soon, the credit history of each of us will be available to any legal entity, and perhaps an individual. Therefore, with a bad CI it will be harder to rent a car or an apartment.
To make it more clear how much a credit history can cost, consider examples of buying a car and a new house on credit in the context of three CI ratings – good, medium and bad. In our examples, the car will cost $ 20,000, and the house $ 150,000. The house is taken on credit with a fixed rate for 30 years, and a car for 3 years.
Besides the fact that a person with a bad credit history is harder to apply for a mortgage, he will also overpay many times more than a person with a good CI. For clarity, we showed a mortgage of 9.75% and with a 30% down payment. With a bad credit account, you may have to pay $ 50,000 as a down payment and take $ 200,000 at 9.75% per annum. In this case, the overpayment will be $ 209,475 – more than two times more than the loan amount and more than the house itself costs!
With the same amount of purchases and payment schedule, a person with an impeccable credit history saved $ 4,000 on a percentage when buying a car and more than $ 100,000 when buying a home. With such prospects, a buyer with an excellent score can save on another house or apartment when buying a house and on a good trip when buying a car.
Think of the future now – improve your credit history.
For 30 years or more, you are likely to buy more than one car and finance several large expenses such as holidays or education. Considering how much interest you will have to pay over time, it is really worth the effort to improve your credit history. This can lead to hundreds of thousands of dollars over a lifetime.
In addition to saving money, do not forget about other things that may affect your credit history. You may greatly regret in the future if you miss a decent job or a good apartment. Who knows, maybe in the near future people will refuse to marry a person with a bad credit history.
The good news is that everything is in your hands right now. Small steps today can lead you to a good future tomorrow. Our blog has several articles on how to improve your credit history in the appropriate section. Also, if banks are often denied to you, we can offer you a loan with a bad history.