True Cost of Bad Credit VS Good Credit

What is the cost of good credit versus bad credit? Let’s find out now.

Welcome to Monday Transportation in Minutes. There’s so much talk all the time about how important is your credit score. The answer is very important. Bad credit costs you; good credit saves you. I wanted to give you an example of truly the cost of bad credit versus good credit when it comes to purchasing a truck for your transportation business.

Here’s the example I built out for us today. If you were to buy a $150,000 truck and let’s say that you had good credit. Let me define good credit, in fact, let me go ahead and give you the range of credit. The lowest credit score you can get is 300; the highest credit score you can get is 850. Everybody knows that north of 700 is considered good credit.

The goal should be to get your credit score to be North of 700. So, in the example I’m giving here of $150,000 truck financed with good credit, I’m going to call it at a 6.9% rate for 60 months, your monthly payment is $2,963. That’s considering 100% financing by the way.

Now let’s look at the cost of bad credit. If your credit is below 700, let’s say that it’s going to trigger a high-interest rate. That interest rates going to bump to 12% for you. By the way, 12% isn’t super high with bad credit in transportation. You could easily be seeing 16, 18, 20, we’ve even heard nightmare stories of people being charged 30%, 30% because of your bad credit. Come on, we’re talking huge, huge numbers for bad credit. So, your credit’s slightly challenged, and you’re going pay 12%, $150,000, 60 months, 12% interest rate. Your payment’s $3,336. That is a difference of $373 a month times 60 months is $22,380. You will pay $22,380 more because your credit score isn’t up to snuff. Now, I want to give you three tips on how to drive that credit score up, and you can do these easy.

Number one, always pay your debts on time. I know it seems so silly and so simple, but it’s true. Nothing impacts your credit score more than currently delinquent accounts on your credit bureau.

Number two, this is important. Keep your balances low on your credit cards. So for example, if you have a $10,000 limit on your credit and you carry a $7,000 balance, that’s going to hurt your credit score. You really want that balance to be $3,500 or below, about 35%.

So, here’s the deal. We have a lot of customers that tell us this, I have to carry high balances because I put my fuel on it, I put repair and maintenance on it, and I can’t do it for $3,000 a month. Heck, my fuel bill’s more than that. We get it. So, here’s the tip. You have to go get your limit increased. You got to go from a $10,000 limit to a $20,000 limit because the amount of limit is not what impacts your credit score. It’s the amount of debt service against the limit, and you want that to be 35% or below. So, that’s number three, by the way.

Those are the three key benefits on how you can improve your credit score quickly, and it’s a real-life example of how your credit being poor radically costs you more money.

Here is your bonus tip. We found an app that we think would be tremendously beneficial for you. It’s called, and creates efficiencies within your business. It helps you keep track of receipts. It helps make a profit and loss generated much easier. We think you should look into it. It’s Thanks for watching, reading, and listening.