- Fees: Creditors may add fees, such as late fees, over-limit fees, legal fees, repo fees, penalty fees, deficiency payments, and default rates, to your balance.As bad as the fees can be on your credit cards, they can be even worse on your secured loans. If you fall behind in your house payment, you can be hit with huge fees to the tune of thousands of dollars.
- Higher interest rates: The lower your credit score, the higher the interest rate you have to pay. Making matters worse, the policy of universal default says that if you have an issue with one lender, all your lenders can hike your rates, even though you’re still paying the others on time and as agreed.
- Less than favorable loan rates: In a time of tight credit, you may not qualify for a loan at all.
- Lost employment opportunities: Increasingly, credit checks are a standard part of the hiring and even the promotion process at companies large and small throughout the United States. Businesses reason that the way you handle your finances is a reflection of your behavior in other areas of your life.
- Higher insurance premiums: A strong correlation exists between bad credit and reported insurance claims. Insurance companies run a credit check when determining your premium, so bad credit may cost you a bundle in insurance-premium increases or result in your insurance being denied.
Mortgages with Bad Credit
How bad credit affects home loans –
The 30-year fixed jumbo home mortgage APR’s are estimated based on the following assumptions. FICO scores between 620 and 850 (500 and 619) assume a Loan Amount of $300,000, 1.0 (0.0) Points, a Single Family – Owner Occupied Property Type and an 80% (60-80%) Loan-To-Value Ratio.
Take a look at the chart below. Notice how a low FICO score increases the amount of money you will end up spending on a loan throughout the course of its life. If your FICO score is below a 560, most lenders will not even consider offering you a jumbo loan for a FICO score that low. If you want to save money and stay away from bad credit mortgages, sign up here!
| Credit | Score | Rate | Payment | Added Cost |
| Excellent | 720-850 | 4.31% | $1,487 | $0 |
| 700-719 | 4.53% | $1,526 | $14,040 | |
| Moderate | 675-699 | 4.71% | $1,558 | $25,560 |
| 620-674 | 4.93% | $1,597 | $39,600 | |
| Bad | 560-559 | 5.36% | $1,676 | $68,040 |
| 500-559 | 5.90% | $1,780 | $105,480 |
Auto Loans with Bad Credit
The 36-month new auto loan APRs are estimated based on the following assumptions. A Loan Amount of $25,000, 36 months and Interest rates are fixed for the term of the loan. (Variable rate loans may be available but are not usually beneficial to a consumer in a low interest rate environment.)
| Credit | Score | Rate | Payment | Added Cost |
| Excellent | 720-850 | 5.30% | $753 | $0 |
| 700-719 | 6.83% | $770 | $612 | |
| Moderate | 675-699 | 8.78% | $792 | $1,404 |
| 620-674 | 12.36% | $835 | $2,952 | |
| Bad | 560-559 | 18.20% | $906 | $5,508 |
| 500-559 | 19.23% | $919 | $5,976 |