STAGGERING COST OF BAD CREDIT
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| We all know that home mortgage and other
loans cost more if we have bad credit than if we have
perfect or good credit. Nowadays bad credit is considered a
FICO score of 620 and good credit is a FICO score of 720. If
the credit markets tighten these scores will probably move
higher and the interest rate spread between loans for bad
credit (if still available) and good credit will widen even
more. |
For our example we'll compare the outcomes for two 35 year olds who make the
same amount of money and are on a similar career path in the same company. They even have the same
birthday. They both are lucky enough to buy a house with a $150,000 30 year
mortgage on their 35th birthday. Bob has the 620 credit score and his
monthly loan payment is $1,100. Bill got
credit repair help and has good credit so the interest rate on his
loan is less with a $805 monthly payment.
Bob and Bill like their houses and the family likes the
town they live in so they both stay in their same houses.
Their kids attended the local college together. Jumping 30
years ahead they both retire at age 65 and celebrate
together while they burn the mortgage notes on their home
mortgages.
After the mortgage burning party Bill tells Bob he just joined the country
club and invites Bob to play golf there as his guest. On the drive to the
country club in Bill's new car Bob asked Bill, "We worked for the same company
at the same pay grade, have similar houses, and paid for our kids college, how
is it, if you don't mind me asking, that you can buy a brand new car and join
the country club after you retire?"
"I'm kid of rich now," said Bill. After I bought the
house I put about $300 into my IRA every month. Just like
clockwork.." "The stock market averages growth of
about 10% a year over the long term, and the laws of
compounding did their magic." "My IRA was almost
$667,000 the day we retired. I looked at my statement. I'm
2/3 of a millionaire now. "
Call Lexington Law Firm
 today.
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CREDIT BLOG
