Cost of Living with Bad Credit

Living with bad credit can feel like the only option you have, leaving you to pay big deposits and high interest rates while you work hard to slowly rebuild your credit score over several years.

For the average family, the two biggest and most important expenses to pay are monthly payments for your home and your vehicle. We’ll take a look at the cost of rent and car payments when you’re living with bad credit, and show you that you don’t have to live with bad credit forever.

Monthly Rent

A major downside to living with bad credit is the inability to be approved for a mortgage. Instead of owning your home, you have to pay rent to live in someone else’s property.

In Texas, according to findthebest.com, the average rent for a 3-bedroom, 2-bathroom house is $1,320 per month. After renting for just 2.5 years, you’ll pay $39,600 in rent. That’s nearly $40,000 that you could have paid into a mortgage for a home of your own, but instead it’s going into someone else’s pocket without building any value for you or your family.

Living with bad credit causes you to spend money on rent for years. Having a mortgage allows you to build up equity, and insures that your hard-earned dollars are invested towards a home and a piece of property of your own.

Car Payments

When it comes to car payments, the good news is that even with bad credit, you can be approved for a car loan. The bad news is that with poor credit, you will be approved only with a significantly higher interest rate. Let’s take a look at what this higher interest rate will really cost you.

We’ll use a 2013 Honda Accord as an example because it’s a newer, reliable car but still quite affordable. We’ll take the total cost, $22,997, and finance it over five years.

The average interest rate with good credit is only 3.4%, which means:
– each monthly payment is $417.33
– total interest paid is $2,042
– total payment made over five years is $25,039

The average interest rate with bad credit is 19.7%, which means:
– each monthly payment is $605
– total interest paid is $13,329
– total payment made over five years is $36,326

When you compare those sets of numbers, it’s clear there is a big difference in how much is paid in total. Someone with bad credit who has an interest rate of 19.7% ends up paying $11,287 more than someone with good credit. So not only is the monthly payment nearly $200 more a month, but that’s over $11,000 dollars wasted because of the higher interest rate.

We’ve made it clear that living with bad credit will cost you more money in the long run. Not being approved for a mortgage means that you have to waste your hard-earned money on rent, and a higher interest rate when financing your car means spending thousands of dollars more on interest.

But don’t lose hope! Something can be done about it right now. We can work with you to repair your bad credit. By putting together a custom strategy to remove negative accounts with the creditors, every collection agency, and all three credit bureaus, teaching you good spending habits, and more, we will turn your bad credit into good credit in just six months or less.

If you’d like to have good credit as soon as possible, contact us immediately. We create improvements in your credit score ever month, and in just six months from now you could be approved for a mortgage and lower interest rates on all of your payments. Take control over your credit score and live with financial peace of mind you deserve.

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