Bob with 780 FICO Credit Score – Tom with a 610 FICO Credit Score

Bob and Tom are neighbors. Both Bob and Tom paid $100,000 for their suburban homes. Coincidentally, Bob and Tom got great deals on their new minivans and paid $20,000 each as the dealership was closing.

Bob and Tom have a lot in common although Bob and Tom manage their money and bills much differently.

For over 8 years, Bob has paid all of his bills on-time and in-full. Bob works as a retail assistant manager. Bob has a mortgage on his small suburban home and one car loan. Bob has two bank credit card accounts that he has carried balances on intermittently but always paid the balances off completely at some point.  Bob has one gas card that he pays in full every month and a department store account that is rarely used and has no balance. Bob also pays his utility and tax bills on time or just a bit early.

Tom also works as an assistant manager at a competing retail store. Tom also has a mortgage and a car loan. Tom has two major bank credit card accounts. Tom also has three fuel cards and four department store credit cards. Occasionally, Tom sends his mortgage late by a few days. Tom carries a balance on all of his credit cards except for one gas card and one department store credit card. Most months Tom sends the minimum payment amount on his credit cards, although he missed a payment here and there over the last five years. Tom paid his income tax bills late last year as well. Tom also fills out a number of credit applications that come in the mail every year.

Wow! Bob and Tom are neighbors with identical homes and vehicles. Tom pays a lot more to live in a house just like Bob and drive the same minivan. Just how much more does Tom pay than Bob?

Tom pays $445.36 more per month than Bob. Wow! Let’s take that one step further.

$445.36 / $890.12 (Bob’s Cost to Live) = 50% More

Crazy! Tom pays 50% more per month because he has a much lower credit score than Bob. Remember, Both Bob and Tom are neighbors with identical homes and vehicles, although Bob and Tom have different financial habits.

Conclusion – Bob and Tom Example – Credit and Monthly Costs

Bob has a high credit score because he has a history of paying all of his bills on-time and in-full. Bob also has $445.36 a month more than Tom to use for savings, vacations and a better quality of life.

Bob’s extra $445.36 a month is equal to $5344.23 a year!

Bob’s High FICO Credit Score – Easy Financial Transactions

Bob automatically qualified for the 0.9% financing as his credit score was above 750. Tom argued with a loan officer for almost an hour just to convince him he was good for the loan and spent a considerable amount of time explaining the blemishes on his credit report. Bob’s transaction was easy and he never even met the loan officer. Bob was approved a few minutes after he completed the credit application.