Credit Cards: Most, if not all, prime credit cards are entirely out of reach to consumers with bad credit. The few credit cards that are available to them (known as “sub-prime” cards) typically require exorbitant setup fees or recurring monthly fees, offer very low credit lines, often require cash security deposits, and in most cases do not even report your positive credit activity to the credit bureaus.
Automobile Financing: If you are making payments on a car, you are probably paying between $2,000 and $5,000 more just for having bad credit. This added interest shows up every month in a higher payment.
Home Mortgage: Bad credit in auto financing can really hurt, but it is nothing compared to the cost of bad credit when a home is involved. A typical home can cost between $90,000 and $250,000 more in interest if you are buying the home with bad credit. $200,000 mortgage paid over 30 years As you can see, a low score can cost you hundreds of dollars per month. Which is why it is so important to obtain and maintain as high a score as possible.
The methods of calculating your FICO score may differ slightly depending on the credit bureau. When obtaining your score from one of the Credit Bureaus it is important to understand that your score does not come directly from FICO. It is adapted to each bureau and is given its own name: Equifax uses “Beacon”, Trans Union uses “Empirica”, and Experian uses “Experian/Fair Isaac.” These scores are also referred to as your “Bureau Scores.”
Since your score is derived from your bureau data, it will change every time your reports change. However your score is calculated, it will always take into consideration many categories of information. No single piece of information or factor determines your score. As the information in your credit report changes, the importance of one or several factors may change in your FICO score.
Lenders look at many things when making a credit decision, including your income and the kind of credit you are applying for. However, your FICO score does not reflect these facts as it only evaluates the information retained by the credit reporting agency.