Among the things debt troubles can lead to is a lowering of one’s credit score. A lowered score can have many negative implications for a person. For one, it could expose him or her to significant additional costs in the future.
This is because having a lower credit score can make getting loans much more expensive. Individuals with lower scores can face much higher interest charges. This can be seen in a recent study.
The study looked at various data to compare the average amount of interest charges for individuals with very good credit scores and fair credit scores over the lifetime of different types of loans/credit. Very good scores were in the 740 to 799 range, while fair scores were in the 580 to 669 range. The types of credit that were looked at were: auto loans, credit cards, mortgage loans, personal loans and student loans.
For each of these types of credit, the interest costs were a good deal higher for individuals with fair scores than for those with very good scores. The difference was particularly large for certain types. For example, people with fair credit scores were found to face 271 percent and 311 percent higher interest costs for personal loans and auto loans, respectively.
Such differences can add up to quite a bit. According to the study, a fair credit score could lead to a person facing around $45,000 more in interest costs over a lifetime of borrowing as compared to a very good score.
Now, if a credit score gets low enough, it might not just make loans more expensive, it could cut off access to some types of credit. This could make it much more difficult for individuals to achieve their financial and life goals.
So, what a person’s credit score is can have some considerable long-term financial ramifications for him or her. This is one of the many reasons why how a person responds to debt troubles is so important. So, when problems with debt arise, it can be critical for individuals to understand what credit score implications the different routes out there for addressing such problems, such as personal bankruptcy, could have for them. This includes how quickly these different routes could get them into a position where they can start taking steps to significantly repair their credit score. Skilled bankruptcy attorneys can help individuals get accurate information on such topics.
