The big Credit Score and how it works

If you are anything like me, you have often wondered how FICO really works?  The company behind FICO has published the specific point drops for common missteps.   You can find them on the fico website.

Here is the breakdown of 3 common financial difficulties and how their specific point drops.

Maxed Out Credit Card

·        Starting score of 780:  25-40 point drop

·        Starting score of 680: 10-30 point drop

30 Day Delinquency

·        Starting score of 780: 90-110 point drop

·        Starting score of 680: 60-80 point drop

Foreclosure

·        Starting score of 780: 140-160 point drop

·        Starting score of 680: 85-105 point drop

Not surprisingly, the higher your score, the bigger your fall.  This deals with the fact that credit scores are there to predict the chance of a loan default.