What’s the first thing you are told when you go to buy a car or get a mortgage; they have to pull your credit to see if you qualify? Have you ever heard the term, “your score is not perfect but not bad either”? Now what does that mean really? For those that don’t know, it simply means “money in the bank”. Literally!
Well, if you get into a situation where you are told that your score is not perfect, but not bad, I will suggest you run as far away as possible. It makes you think that if it’s not bad you should be able to finalize a purchase. The answer is yes, but the question is, at what cost?
If you are allowed to purchase with a low credit score, do you think there is any benefit to you in the long run? You are charged ridiculous fees and always placed into a high interest rate. The merchant is the one that’s benefiting? Most of the time when you have a low score it’s beneficial to the merchant to give you want you want because they are able to profit significantly in the long term in interest as well as short term by charging more fees.
I had a friend that shared an experience while he was part of a program where they were teaching people how to become “mortgage ready”. This was for people who would like to purchase a home, so they were going through the details of the process. The banker at the time mentioned that all that’s needed to be “mortgage ready” was a fico score of 630 and with all other documents, you should be fine. He said his response at first was, wow! 630. That’s it. That seems pretty easy.
Then the light bulb turned on as he drove home. With a 630 fico score that is considered as a major benefit to the lending institution. As we say, “that’s money in the bank’s pocket”. Do you believe your bank deliberately withholds information concerning your credit score and bank fees? This happens more often than you may think. If your bank does not tell you the relationship between your credit score and bank fees, you are paying higher fees than a person with a 720 or higher credit score.
In most cases, instead of telling the truth about how credit scores affect you, banks across the country are letting their customers pay an arm and a leg in interest rates
The banker didn’t mention that the difference between a 630 credit score and a 720 credit score was $63,720 over the course of a 30-year loan on a $216,000 mortgage. His bank would earn $63,720 in fees of consumers’ hard-earned money if they get approved for a home loan with a 630 credit.
So the Truth Game really doesn’t exist in the Credit Industry because the lower your score the more money is made off you. The Truth is, if you just have average credit you will always a target to be robbed of your hard earn money. It’s important to get your credit restored and monitored. Get your knowledge with Financial Education Services.
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Originally posted 2014-03-29 08:05:40.