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Credit is a Super Power

Updated: Apr 24

Have you ever wondered how different people with the same amount of debt can live completely different lifestyles?


Did you know you can build your credit before even having a job? Or that a good credit score can save you HUNDREDS of THOUSANDS of dollars over the course of your lifetime? We want to teach you how to better your score so you never have to worry about falling prey to predatory lending.

Here's an example of exactly how big of a difference credit can make on a small loan! Check out this chart below for reference. Information obtained through Experian.

In our example, we have 2 people looking for used vehicle loans at the age of 18. Melena was prepared years in advance for this day. She's been an authorized user on her parent's credit card and used it responsibly since the age of 11. As soon as she turned 18, she opened her own secured credit card. Her credit score is 785. David has been working hard since 16 and has some savings, but not enough to purchase a reliable car he likes to get to work and college. He likes paying for everything in cash to keep his finances simple. He pays all of his bills on time, but none of them report to the credit bureau. One time he forgot to pay for his gym membership and was reported to the credit bureau for the missed payment. Despite being a potentially good borrower, his limited history shows otherwise. David's credit score is 495. Looking at the chart, Melena will qualify for a 4.08% loan on her used car, while David will qualify for a 20.67% loan.


Let's take this just one step further and look at the overall difference in cost for these two cars David and Melena are buying. Keep in mind, the purchase price is the same for each vehicle.

The overall costs of the vehicles over the course of the 5 year loan is highlighted in orange for David, and yellow for Melena. Because of Melena's credit score, her 4.08% loan saves her more than $5,000 over 5 years vs David's 20.69% loan. Winning!


Let's multiply that by the number of cars most Americans own over the course of their lifetime, which is 9 (according to the best available research at the time of writing). A Great credit score will save you more than $45,000 just on vehicles over someone with a bad credit score. Not a bad return with no money invested, just discipline!


Money talks... and we know it! Hopefully we have your attention enough to get you through all the ways we know of to start a healthy credit history!


Here at Skip Class our priority is inspiring people to make the best possible financial decisions to help close the wealth gap between the rich and the poor. To further help each of us make the best possible decision, we're going to take this scenario one step further.


Melena and David are now 25 years old, and young professionals earning $70,000 per year. Melena paid off her car on time and continued making payments on her credit card in a timely fashion. In addition, she's never missed paying a single bill! Her credit score is 810. David was a little bit discouraged with his vehicle loan, and the payments were significantly higher than Melena's which made it hard to pay each month. David was too tight on money a few months over the course of the loan and used his secured credit card to cover the bill. This incurred a fees and interest charges, making the loan cost even more. Those tight months spiraled into a couple of years of bad credit history until his feet were firmly planted in his new steady job. David had such bad experiences with his loan that he paid for everything else in cash to make sure he avoided interest and fees. His credit score is still 625 even with 7 years of history, because it is bad history.


Both David and Melena are looking at $500,000 homes for themselves in Illinois. Lets use this chart to check out the rates available to Melena with her 810 credit score, and David with his 625 credit score.

According to the information provided by myfico.com as of 12/30/20, Melena would save $156,000 on her home mortgage compared to Dave! Between the vehicles and the house, Melena saves more than $201,000 over Dave! Melena is free to use those savings however she pleases! Maybe she decides to invest for an early retirement, buy a vacation home, pay down her mortgage early, or take 40 vacations at $5,000 each!


Truth is, getting a good credit score isn't as tricky as one might think. We've condensed all the best available information on boosting your credit score in our article titled "Grow Your Credit", or by clicking right here!


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