How Much Does Bad Credit Cost You? The $93K Math
A credit score below 620 costs the average American over $93,000 in extra mortgage interest alone. When you add auto loans, credit cards, insurance, and deposits, the lifetime cost of bad credit reaches $150,000 to $300,000. Here is the math.
How much extra does bad credit cost on a mortgage?
The difference between a 620 credit score and a 760 credit score on a $300,000 30-year fixed mortgage is approximately 1.5 to 2.5 percentage points in interest rate. At current rates, a borrower with a 620 score might pay 8.0% APR while a borrower with a 760 score pays 6.4% APR. Over 30 years, that 1.6 percentage point difference costs $93,000 in additional interest payments.
That $93,000 is not a theoretical number. It is the difference in total interest paid between two borrowers who take out identical $300,000 mortgages on the same day — one with a 620 score and one with a 760 score. The monthly payment difference is roughly $258. Over 360 months, that adds up to $93,000 that goes to the lender instead of building equity.
Mortgage cost by credit score ($300,000 loan, 30-year fixed)
How much extra does bad credit cost on an auto loan?
On a $35,000 auto loan with a 5-year term, the rate spread between excellent and poor credit is even wider than mortgages. A borrower with a 760+ score might qualify for 5.6% APR. A borrower with a 580 score might pay 17.9% APR. Over 60 months, the 580-score borrower pays approximately $12,400 more in interest on the same vehicle.
Excellent credit (760+)
$5,200
total interest on $35K car
Fair credit (620-659)
$12,700
total interest on $35K car
Poor credit (580-619)
$17,600
total interest on $35K car
Where else does bad credit cost you money?
How much more do you pay for credit cards with bad credit?
Credit card APRs range from about 18% for excellent credit to 29%+ for poor credit. On a $5,000 revolving balance, the difference is $550 to $800 per year in additional interest charges. Over 5 years of carrying a balance, that is $2,750 to $4,000 in extra cost.
How does your credit score affect insurance premiums?
In most states, auto and homeowners insurers use credit-based insurance scores to set premiums. Drivers with poor credit pay an average of $500 to $1,500 more per year for auto insurance than drivers with excellent credit. Over a decade, that is $5,000 to $15,000 in extra premiums for the same coverage on the same vehicle.
What about security deposits and rental applications?
Landlords routinely require larger security deposits — sometimes 2 to 3 months of rent instead of 1 — for tenants with low credit scores. Utility companies may require deposits of $100 to $400 for new service. Cell phone carriers may deny postpaid plans entirely, forcing prepaid plans with fewer features. Each of these costs is individually modest but collectively adds $200 to $1,000 per move.
Can bad credit affect employment?
In states that allow it, some employers check credit reports (not scores) during background screening, particularly for roles involving financial responsibility. While a low credit score alone does not disqualify a candidate, collections, bankruptcies, and unpaid debts on a credit report can factor into hiring decisions for financial, government, and security-clearance positions.
The total lifetime cost of bad credit
When you add mortgage interest ($93,000+), auto loan interest ($7,500 to $12,400 per vehicle, 2 to 3 vehicles in a lifetime), credit card interest ($2,750 to $4,000 per year of carrying balances), insurance premiums ($5,000 to $15,000 per decade), security deposits ($200 to $1,000 per move), and opportunity costs from denied applications, the total lifetime cost of maintaining a credit score below 620 versus above 740 is conservatively $150,000 to $300,000.
Estimated lifetime cost of bad credit
$150K–$300K
across mortgages, auto loans, credit cards, insurance, deposits, and denied applications
Use the credit cost calculator to see your specific numbers based on your score range.
What does improving from 620 to 740 save?
The 120-point journey from 620 to 740 is the most financially impactful credit score improvement a consumer can make. It crosses 2 major scoring thresholds: the 660 threshold where most conventional lenders begin offering competitive rates, and the 700 threshold where you qualify for the best auto loan rates and credit card terms.
Improving from 620 to 740 typically takes 12 to 24 months of consistent effort. The primary driver is on-time payment history — at 35% of the score, it has the largest impact. Adding a new trade line with 12 months of on-time payments directly builds this category while also contributing to credit mix and credit age. Reducing credit card utilization below 30% (ideally below 10%) addresses the second-largest category at 30%.
The return on effort is substantial: that 120-point improvement saves approximately $93,000 on a mortgage alone. Add the savings on auto loans, insurance, and credit cards, and the total value of the improvement exceeds $150,000 over a lifetime. For a detailed breakdown by loan type, visit the myFICO Loan Savings Calculator.