Alert
Close

Help hungry seniors. Deliver help and hope before Thanksgiving. Donate

Highlights

Open

You and Your Town Contest-You could win an AARP RealPad

AARP Auto Buying Program

Contests and
Sweeps

$10,000 Winter Escapes Sweepstakes

Beat the cold and cozy up to a chance of winning $10,000! See official rules.

Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

AARP Books

Visit the Money Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

Jobs You Might Like

most popular
articles

Viewed

Pay Down Your Debt Challenge

How Bad Credit Costs You

A poor credit rating can impact your finances, job search and more

Think about the credit cards, mortgages, business loans, auto loans or student loans for which you've applied or might co-sign for in future years.

When you have bad credit, you'll have to pay an exorbitant amount of money in interest and finances charges — that is, if you get approved for a loan at all.

As of July 2011, for example, a person with a FICO credit score of 760 or higher who qualifies for a $300,000 mortgage can expect to get that loan at a rate of 4.3 percent. This borrower's monthly payment will be $1,485, according to data from Bankrate.com.

Now contrast that with someone who has shaky credit and a 620 FICO score. This individual will only qualify for a $300,000 mortgage at an interest rate of 5.9 percent. That translates into a $1,779 monthly payment. Each year, the second borrower will fork over an extra $3,528 to the bank. And over the life of a 30-year loan, the person with bad credit will shell out $106,126 more in interest alone.

Make the same calculations for all other credit obligations you might take on, and it's easy to see that bad credit can cost you dearly when you need to secure a loan or credit.

Excellent Credit Helps You Save or Earn Money

In other areas, too, having bad credit can cost you a fortune, namely because it can impact your ability to save and earn money.

Did you know your life and auto insurance rates are tied to your credit rating? It's true. People with excellent credit are offered lower insurance rates than those with poor credit. It may not seem fair, but that's how the system works.

On the job front as well, having a bad credit profile spells financial trouble.

For starters, employers are increasingly pulling people's credit reports before determining whom to hire and whom to promote. According to the Society for Human Resources Management, 60 percent of all U.S. employers now conduct credit checks as part of the employment screening process.

In a worst-case scenario, bad credit can prevent you from landing a lucrative job, or getting a promotion that you deserve.

Next: 4 things you can do to stay on top of your credit. >>

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Life insurance: you are covered rain or shine

Exclusive annuities for members from AARP Lifetime Income Program from New York Life.

AARP Credit card from Chase

Members can get cash back rewards on purchases with the AARP® Credit Card from Chase.

Homeowners Insurance
Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.

Being Social

featured
groups

savingchalleng

Savings Challenge

Have the gift of thrift? Share your tips. Discuss

Hand holding credit cards

Pay Down Your Debt Challenge

Join our challenge July 18-Aug. 14 and start your debt-free journey. Discuss