An easy way to figure the cost of bad credit

Ever wonder what a bad credit score costs you? No need to wonder anymore. The editors at Credit.com have created a new online tool -- the Lifetime Cost of Debt Calculator -- that tells you in dollars and cents.

To be specific, a 30-year-old with poor credit is likely to pay a quarter-million dollars more in interest payments over her lifetime (assuming an $18,000 car loan, $5,000 in credit card debts and a $400,000 mortgage) than a similar person with a pristine score. If your credit is good, but not excellent, you'll pay about $30,000 more over your lifetime than that individual with excellent credit, according to the calculator.

"It's easy to underestimate how much a credit score can cost -- or save -- you over a lifetime of borrowing," said Gerri Detweiler, director of consumer education at Credit.com. "Most people understand that it affects their ability to get a car loan or rent an apartment, but they underestimate how much their credit affects how much they pay in interest."

The new calculator is completely interactive. Consumers can plug in their own loan balances and slide the toggle bar to see how much their debt will cost them given their current credit score, or the score they think they might be able to attain with better behavior.

What might happen to your cost of debt if you file for bankruptcy? Slide the toggle bar to the left for the distressing news of what you'll pay if your credit goes belly-up.

The calculations assume that, at today's rates, a consumer with perfect credit (740 or more) will pay just 3.75 percent for a mortgage, while someone with poor credit would pay 6.25 percent (if they could get a loan at all).

The cost differences are far greater with unsecured debts, such as credit cards (rates range between 9.25 percent and 24 percent) and debts that are secured by a depreciating asset, such as auto loans (3 percent to 15.4 percent). And the cost of car loans assumes that the average borrower will have 18 different cars over a lifetime, buying a new car every three or four years.

Loan rates change over time, so Credit.com will periodically update the calculator's interest rate assumptions, too, Detweiler said. But the tool isn't aimed at giving consumers a to-the-penny estimate, she added. It's really about graphically explaining the benefit of maintaining good credit.

The calculator itself also doesn't provide any advice on how to improve your score. But consumers who want to sign up for a free Credit.com account can access their current score and get a personalized plan aimed at improving it. (Other credit sites, including CreditKarma offer a similar free service.)

Note that any site offering a credit report or credit score will ask for your Social Security number to pull your credit report. That report will also be used to make recommendations for improvements.