How Much Will Your Credit Score Drop With A Foreclosure?

Many times people will ask me “how much will my credit score drop if I have a short sale? What if I have a foreclosure?” and usually, my answer was something like  “it will hurt your credit, but no one can really tell you exactly how much it will hurt your credit.”

Until now.

Fair Issac Corporation (FICO) has just released some of the top financial missteps that people make regarding their credit and exactly how much each one can impact their credit score. FICO did this to help educate people about their overall credit profile and give them an idea of what kinds of things can negatively impact their credit score.

A few highlights of the common mistakes people make and how many “damage points” they can expect:

If your credit score is currently 780:

• Maxed out credit card – 25-40 points
• 30 Day Late Payment – 90-110 points
• Debt Settlement – 105-125 points
• Foreclosure – 140-160 points
• Bankruptcy – 220-240 points

If your credit score is currently 680:

• Maxed out credit card – 10-30 points
• 30 Day Late Payment – 60-80 points
• Debt Settlement – 45-65 points
• Foreclosure – 85-105 points
• Bankruptcy – 130-150 points

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. ”

With the revealing of at least part of their overall FICO formula of how your credit score is calculated, one thing that is now known is that those people who have excellent credit have more to lose with a mistake. For example, someone with an average credit score of 680 who pays a bill 30 days late will see a drop of 60 to 80 points. But for someone with an excellent credit score — 780 — that same delinquency can send a FICO score tumbling by 90 to 100 points.

It appears as if FICO is making steps toward making your credit score more transparent – so that you can not only have access to your credit score, but you can also now know what kind of damage you can do to it by making a mistake.