ICO "Damage Points" Disclosed by Fair Isaac

FICO Reveals how credit scores can be affected

Posted on October 17, 2011 by admin
Disclosed for the 1st time, ‘damage points’ taken off for late payments
By Jeremy M. Simon

DAMAGE POINTS:
HOW MISTAKES AFFECT FICO SCORES
Credit mistake
If your starting score is 680
If your starting score is 780

Maxed-out card
680 – Down 10 to 30 pts.
780 – Down 25 to 45 pts.

30-day late payment
680 – Down 60 to 80 pts.
780 – Down 90 to 110 pts.

Debt settlement
680 – Down 45 to 65 pts.
780 – Down 105 to 125 pts.

Foreclosure
680 – Down 85 to 105 pts.
780 – Down 140 to 160 pts.

Bankruptcy
680 – Down 130 to 150 pts.
780 – Down 220 to 240 pts.

Source: FICO

Borrowers already knew that late payments hurt their credit scores, but for the first time, they now know the extent of that damage.

Did you max out your credit card? Expect a credit score drop of 10 to 45 points. Declare bankruptcy? Your score will plummet by up to 240 points, and your odds of getting credit will nosedive with it.

The “damage points” data, unveiled Thursday by FICO, are part of the most revealing glimpse into the firm’s once-secret — and still mysterious — credit scoring model. The new information discloses how many points borrowers’ scores will drop when they make the most-common mistakes.

‘Help people understand’ scores
“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. ”