What Does Bad Credit Really Cost You?

by: Francis Achebe

The average individual with bad credit has no clue of what effects their credit score nor the effects of having bad credit does in reference to the impact of how much extra they pay in interest rates. Take a minute and get your credit report so you can see where you can make gains.

According to Credit.com 61 million Americans have sub-prime credit scores between (500- 649)





Do not charge more than 30% of the available balance on any of your credit cards. Banks like to see a nice record of on-time payments, and several credit cards that are not maxed-out. If you are carrying high balances on your credit cards, then make paying them down under 30% a priority.”

AP Los Angeles Business Writer Alex Veiga – “Credit experts say the single best way to improve one’s credit score is to make payments on time and keep credit balances at 30 percent or below your total available credit.”

Atlanta Journal Constitution – “Pay down your credit so that you don’t owe more than 30 percent of the credit limit, and have a ‘healthy’ mix of credit.”

CreditCards.com – “To boost their credit score, a borrower should maintain low credit card balances, with experts recommending that the amount owed should not exceed 30 percent of the individual’s credit limits.”

​New York State Senator Charles J. Fuschillo, Jr. – “Limit the use of each of your credit cards to 30% of the card’s credit limit. Having too many maxed out cards could lower your score.”

WikiAnswers – “Also, if you have a high limit but 30% or less balance owed, that is the strongest for FICO purposes.”

Washington Post – “If you are using more than 30 percent of your available credit balance on any one card or on all of them together, you could see a significant drop in your credit score.”

Paying down your balances can improve your credit score, and the sooner the better. FICO’s Score Simulator offers an example in which an individual with a credit score of 600 could raise their score 70 points by simply adding a trade line for $5,000. (keep in mind the simulation runs this for an individual with 6 open trade lines of credit, the impact of someone with only one open line of credit will increase this number much higher.