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A credit score reflects how likely you are to repay your debts and can make or break whether you qualify for a new home, that new car you’ve been dreaming of, or what you pay in interest on your credit cards. Here are 6 ways a low credit score will cost you;
1. Home Loans. Interest rates on home mortgages can vary greatly as they are determined by your credit score. A low credit score will result in a higher interest rate and if you need mortgage insurance that also is based on your credit score. You will definitely get less property for the money due to these higher payments and fees. And, you may not qualify at all. You can easily spend thousands a year more for a house as little as $200,000 because of a low credit score.

2. Car Loans and other installment loans. You have seen the car commercials, 0% interest for 60 months to qualified borrowers. Yes borrowers with great credit scores. If your score is low you will not qualify for 0%, you may pay a higher rate, I’ve heard of rates in the high teens recently. That is a $3600 yearly difference on a $20,000 car. $300 a month. Interest for any loan is based on your credit score.

3. Credit Cards. A low credit score may keep you from even being able to get a credit card. You might have to make a deposit equal to the credit line you would like to have. Credit card companies like to see your score over 720 and some like to see it higher to offer you the preferred accounts. If not you might have interest rates even over 20% annually. On a $5000 balance, this could cost you $1000 in interest yearly at 20% compared with $450 in interest if your card was at 9%

4. Insurance. Insurance companies look at all kinds of factors in determining if you are a risk and they have found people with lower credit scores are more likely to have a loss than someone with a higher credit score. This effects your car insurance, your home owners insurance, etc.
5. Utility companies and cell phone companies. Utility companies now routinely ask for your social security number when opening a new account. They will run a credit check on you and may require you to establish a security deposit to establish service. While their rates are their rates, leaving hundreds of dollars on deposit is not something you want to do. They may also establish pre-set spending limits if you credit is less than perfect.
6. Getting a job. New employers may get a copy of your credit report before offering you a job. Losing out on that great new job because of a past mistake would be horrible.

So what can you do? Start by getting a copy of your credit report, it is free to do so yearly. Next work to repair the errors on your report. Then if you need to take steps to improve your score. Pay your bills on time, pay them automatically with electronic bill payment, lower the balances on your cards, etc.

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