The problems of getting and paying for credit for low-income people

That's the topic of this article by consumer reporter Michelle Singletary. It includes this hypothetical underscoring how the cost of credit can differ based on one's credit score:

Let’s look at a person taking out an auto loan who has a subprime credit score below 600 (on a scale of 300 to 850, the highest score being the best). He’s buying a $10,000 used car. The subprime borrower has a FICO credit score between 500 and 589, which qualifies him for an interest rate of 17.548 percent for the 48-month loan. He’ll pay a total of $3,987 in interest. Meanwhile, a prime borrower with a FICO score between 720 and 850 is offered a rate of 4.896 percent. Total interest paid: $1,031. [emphasis added]

Leave a Reply

Your email address will not be published. Required fields are marked *