How Many Points Will I Lose?

One of my personal credit coaches and mentors is John Ulzhiemer, he recently posted this article, that I believe is must read for all who care about their credit scores!

If you like a free credit consultation please call me direct at (909) 512-6418

Sincerely,
Carlos Samaniego
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REAL FICO Score Damage Point Amounts CLARIFIED

A constant question I field day in and day out is “How many points will I lose from my FICO score if I… (enter your own example here)?” For years I’ve told people that credit scoring doesn’t work in such a way that there is an exact number of points assigned to any one incident. It’s based on scorecards, characteristics, variables, and weights… all things that are too complex for the average consumer to digest without significant context. The point is, one item doesn’t equal any pre-determined number of points in your FICO score.

Having said that, an article was published on the MSN website that purports to disclose the amount of points that you will lose if you make certain credit report mistakes. The information from that article was picked up and misrepresented by a different writer and posted on Yahoo!’s homepage for several hours. It was titled “FICO Reveals How Common Credit Mistakes Affect Scores”, which is not what FICO did. By 8:15 am the next day, I already had six calls or emails from reporters asking me about the data and the “points lost” information.

Once again, I’m left to clean up the mess caused by someone else. So, in an attempt to clarify the “points lost” chart floating around on the Internet, I called and spoke with Craig Watts from FICO. Craig is their Director of Public Affairs.

The hypothetical examples used for their score impact charts are just that: hypothetical. According to Watts, the different score scenarios “aren’t meant to reflect every consumer experience” and that your own personal experience “could vary significantly.” Basically, this turns “FICO Reveals How Common Credit Mistakes Affect Scores” into false advertising.

Watts and I both agree that the ONLY way to determine the impact of changes on your FICO scores is to use their FICO Score Simulator tool that’s within the myFICO website. The downside is that you’d have to buy a credit report from them. The upside is that the score simulations will actually use your credit data and not data belonging to hypothetical consumers.

For the first time ever, I will disclose the amount of points I would lose based on a variety of score-damaging actions. I used my own personal FICO score report from myFICO and it just so happens that my score is 780. These score changes are based on my own credit files and thus are not speculative or hypothetical.

Credit Event

FICO Score Damage to a Starting Score of 780

Apply for a store credit card ~ 10 points
Take on a new $30,000 car loan ~ 15 points
Take on a new mortgage loan of $350,000 ~ 15 points
Miss a payment on one account that wasn’t already late 40-75 points
Miss the payments on ALL of my accounts this month 60-110 points
Max out ALL of my credit cards. Utilization percentage is now 100% 50-100 points
File for bankruptcy 195-255 points

John Ulzheimer – Credit scoring and credit reporting expert and author, John is the President of Consumer Education for Credit.com. Formerly with Equifax and Fair Isaac, John shares his unique insight of the inner workings of credit scoring models and the credit reporting industry on CreditBloggers.com.

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