Credit Score: FICO Reveals Worst Credit Mistakes To Avoid
That mysterious FICO score. Devised by the Fair Isaac Corporation to assess a consumer’s credit worthiness. FICO has for the first time revealed some information regarding what affects a person’s credit score and how.
We now know that maxing out one’s credit cards will result in your FICO score dropping by up to 45 points. Ouch. Keep that one in mind as the Christmas shopping season is in full swing.
Bankruptcy, bankruptcy, bankruptcy; the debt relief option of last resort. How we are bombarded by bankruptcy lawyers and their TV and radio commercials these days touting bankruptcy as a simple solution to credit card debt. FICO now reveals that a personal bankruptcy will sink a consumer’s credit score by as much as 240 points. How do like them apples?
Having a foreclosure on your record is no walk in the park either. It can drop a consumer’s FICO score by up to 160 points it has now been revealed. What’s puzzling about the recently disclosed FICO credit score scenarios is that people with the highest credit scores get hit harder than those with lower credit scores when making the same credit mistakes.
For example, a person with a credit score of 680 who pays a bill 30 days late can expect their FICO score to drop anywhere from 60 to 80 points. But a person with a credit score of 780 who pays a bill 30 days late would be hit with a drop of 90 to 100 points. Talk about Alice falling down the well.
“I hope this information will help people to better understand FICO scores and the value for them of avoiding credit missteps. It illustrates key points such as the higher your score, the farther it can fall if you stumble,” says FICO spokesman Craig Watts. “Getting and maintaining a good score isn’t complicated. We all just need to pay our bills on time, keep credit card balances low and take on new debt sparingly. “
