# Let's Do The Math

## Are you paying to much?

Brenda Robinson
Financial Adviser in Easton, PA

October 13, 2015

Let me illustrate a point, Let's do the math?

Let's take two fictitious people, Ben and Sydney. Ben has a FICO credit score of 720, an excellent credit score, whereas Sydney's FICO credit score is 650, a fair to poor credit score. Let's look at a scenario where they are both buying a car for \$20,000 on a 60-month loan.
Ben takes out a 4% interest loan, his payments will be \$368.33 per month.
Sydney takes out an 18% interest loan, her payments will be \$507.87 per month.
Sydney will pay \$8,672.40 more for the same car.
Now, let's look at another example where Ben and Sydney buy a house for \$150,000.
Ben's interest rate is 5% and his monthly payments will be \$805.23 per month.
Sydney's interest rate is 10% and her monthly payments will be \$1,326.36.
Sydney will pay \$184,006 more for the same house

In my examples above, we showed you the short term affects bad credit can have a person. Sydney has to pay so much more for the exact same products as Ben, but what does that mean in the long run? Well, if they make about the same salary, the person with bad credit has less "fun" money at the end of the month. Money that could be spent on going out to dinner, taking a vacation, or maybe just investing it into a retirement account. When you have bad credit, more than just your wallet is affected. It affects your family, your well-being, and your overall quality of life.

People who have bad credit can never seem to get ahead of the game because they are spending so much more for the same things. That is why is it so important to work on increasing your credit score and Let's clean up your credit. Removing negative items, consolidating loans, paying off debt, and paying your debts on time are all things each and every one of us can work on each and every month. A little effort can go a long way.

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