Damaged credit is costly.
Not only does it drain people emotionally, it has a very real economic cost attached to it as well.
Let's say you want to purchase a new car and you need to borrow $25,000 for three years or 36 months.
If your credit score is between 500 and 589, you will pay $4,832 more than a person with a top rated score of 720 to 850.
Think of all the things you could buy with that $4,832.
The cost differential involved in purchasing a new home is even more staggering.
The difference between a borrower with perfect credit and one with severely damaged credit given a 30 year fixed mortgage borrowing $300,000 amounts to monthly payments that are $897 per month more or $322,920 more over the life of the loan.
No matter how you slice it, damaged credit is quite costly.
If you purchase anything over time the additional interest required oftenpushes the cost of the item completely out of reach.
A small change in FICO credit scores can mean significant savings for you.
Recall our example of the 36 month car loan for $25,000.
If your score is 589 or less, you wind up paying $4,832 more than someone with a FICO score of 720 or above.
But let's say your score ranges from 620 to 659, a somewhat damaged credit score.
On that same car loan you would pay only $1,548 more than the person with a score of 720 or more.
Moving one's score from 589 to 620, a gain of 31 points, can often be accomplished within 90 daysonce one decides to repair one's credit.
Those 31 points represent the ability to save $3,284 in interest.
If you paid around $300 to improve your credit score a mere 31 points the net savings to you on an automobile loan is $2,984.
Repairing one's credit is, in the end, a sound financial investment.