In an attempt to show consumers how the financial errors they make can come back to haunt them by damaging their credit score down the road, FICO has released some of its stipulations regarding how they keep track of their own scores.
According to CreditCards.com, even a slight slip up like accidentally maxing out a credit card can result in drop of up to 45 points from a FICO score hovering around 780.
A 30-day late payment on a card also can have a significant effect on a score, dropping it anywhere from 60 to 110 points.
However, foreclosures and bankruptcy filings took the cake for having the worst effect on ones score. While foreclosures can reduce a score by up to 160 points, a bankruptcy filing can cut a score by close to 240 points.
“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,” said 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.”
For those who are worried about accumulating unneeded debt through sudden expenses they cannot budget for, taking out a payday loan may enable them to cover a significant one-time cost while knowing that its purchase covers no immediate threat to their credit score.
