Rising Gas Prices Could Lead To Lower Credit Scores
Thursday March 13, 2008
I was completely shocked to see gas prices this past Tuesday. Here in OH, they rose 30 cents overnight to $3.45/gallon. I did the calculations and it's going to cost almost $50 to fill up my car. That's $8 more than I was paying last week and an extra $32 a month. I get gas mileage on my vehicle, but I'm sure the impact is harder on people with large trucks and SUVs.
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Comments
Wow that is a very interesting point that is brought up. Kind of funny how there is a cause and effect to everything in life. I do believe that these high gas prices will effect alot of peoples credit due to high balances.
Correlation does not equal causation. I had family affected by Katrina and, for some, the last thing they were thinking about was paying their credit card bill on time when they also had getting food, water, and shelter to worry about.
People are also having problems paying for their mortgages due to interest rate changes in ARMs or finding out that they couldn’t simply grow into their payment because they didn’t get that raise or promotion at work they had been banking on. With such a huge portion of the paycheck going to housing costs, it’s expected that some people will either be late or skip credit card payments.
We live in a culture where very few live at or below their means and few are financially educated. Few know the true cost late payments outside of the $39 fee (hurting FICO score, Universal Default clauses, and delinquency APR) until it’s too late.
Even if gas prices are higher, that should be no excuse for making at least the minimum payment on time. If you don’t make a few car payments, it’s repo’ed; if you can’t pay your mortgage, your home goes into foreclosure; if you don’t pay your utilities, they get shut off. If you don’t pay your credit cards? Your interest goes through the roof and your credit score is trashed, making it hard to get a home or a job and (possibly) making your insurance rates rise.