Costs of poor or mediocre credit
Example B's total lifetime penalty for poor credit? Over $250,000!! The above example underestimates the true financial costs of poor credit:
- Interest rates in the example are from 2004 - a time when interest rates were at record lows. Higher rates are now prevailing.
- Example B probably paid insurance premiums that were 20-30 percent higher than Example A's, and he/she might of had trouble finding an apartment, all because of his/her credit score.
- The example does not count "opportunity costs" - what Example B could of bought if he/she was not paying so much more interest.