Ever wonder what would happen to your credit score if you had a 30 day late payment? Or are you deep in debt and wondering what to expect to happen if your credit score if you file for bankruptcy? Or maybe you are thinking about doing debt settlement as a way to possibly try to avoid bankruptcy?
Up until recently, financial mistakes were somewhat of a mystery as to what impact they would have on your credit – but thanks to the folks at FICO, now you can have a pretty good idea what several common financial missteps can have on your credit score.
It appears as if the people at FICO are at least trying to be a little more transparent as to how FICO scores are calculated – which in my opinion is a good thing. Now people can have a good idea of exactly what kind of impact their decisions will have on their credit score rather than just “I have bad credit and I am not exactly sure why…”
According to FICO spokesman Craig Watts:
“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. 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. “
Regardless of whether or not FICO releases more information about their scoring model – we know way more about it today than we did a month ago!
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People are constantly wondering what effect a foreclosure or short sale will have on their credit. I think the answer is…time will tell. Everyone’s situation is different and based on the current housing crisis I imagine that in the long run it won’t be as bad as everyone thinks. With so many folks having credit issues, the credit bureaus should somehow find a way to sort through and really identify the deadbeats. We’ll see…
Amazing. I’ve been searching for infomation like this for a while. Expect a trackback
I’ve lost track of how many times I get asked this question by a homeowner in foreclosure or conetmplating a short sale. This is fantastic information
@Debt Cancellation,
I agree — but this is what FICO says their “damage points” are, so for now I guess it is better than anything else we have to go on! Thanks for stopping by and commenting.
@Brandon,
No kidding! I posted this because I get asked the question so much – now I can just say something like “well, I don’t know for sure, but here is what FICO said…”
Thanks for commenting!
Justin
Do they mention anything about how long you are penalized for once the issue has been corrected?
@Ken,
Thanks for stopping by — unfortunately no, they didn’t give any indication of that.
Sorry.
They only give glimpses in to their “magic equations” – and in my opinion, not enough transparency.
Justin
I get asked this question everyday. It’s not that I don’t believe the FICO spokesman, I just think there are so many variables that it’s tough to quantify.
People need to remember that each credit score is unique and there are many possible credit implications with short sales and foreclosures. Your score will certainly get hurt more with a foreclosure than with a short sale, but just how much is dependent on your credit history and your credit profile.
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