How Credit Mistakes Affect Your FICO Score

The Better the Score, the Greater the Pain

Man checking his FICO credit score online using a laptop
•••   AndreyPopov / Getty Images

Credit scores are important for your overall financial health as many creditors and lenders rely on the score to determine whether to do business with you and at what cost. Consumers can monitor their own credit scores, keeping a pulse on their credit standing, but many of the details of credit scoring algorithms remain a mystery.

To help people understand how financial actions affect credit scores, FICO created a comparison involving several hypothetical borrowers. For our discussion we’ll look at two of those, with a focus on the affects of mistakes: one with a good credit history (and score) and one with a poor credit file and score. 

What Is a FICO Credit Score?

A FICO credit score is a brand of credit score (a three-digit number that measures credit risk) used by 90% of lenders. FICO scores range from 300 to 850, with higher credit scores being more desirable and representing lower risk. Generally, a credit score of 670 and above is a good credit score.

Your credit score is based on the information in your credit report, which is collected and compiled with account details from your creditors and lenders.

A good credit score comes with several perks, like better options for credit products, access to higher credit limits, and more negotiating power. You’ll receive better interest rates which means a lower monthly payment, and less money spent on interest. In contrast, a low credit score limits your credit options, makes it more difficult to get applications approved and when you are approved, you may not receive an ideal interest rate.

How Financial Mistakes Affect a Good Credit Score

First, we’ll consider Maria, a 40-year-old software engineer who owns her home and has never missed a payment. Her 19 year credit history includes 21 credit accounts, $6,500 total revolving credit with 12% credit utilization. Her FICO 9 score stands at 793, which is considered "Very Good."

Here’s how certain credit actions will affect Maria’s FICO score:

  • Miss a payment by 30 days: Drop by up to 83 points with a resulting score between 710 and 730.
  • Miss a payment by 90 days: Drop by up to 133 points with a resulting score between 660 and 680.
  • Take out a $5,000 personal loan: Drop by up to 23 points with a resulting score between 770 and 790.
  • Max out credit cards: Drop by up to 128 points with a resulting score between 665 and 685.

Payment history and amounts owed (or “credit utilization”) are the two biggest factors in the FICO score calculation.

How Financial Mistakes Affect a Bad Credit Score

By comparison, Sophia is a 26 year-old nurse who rents her home and has had a 30-day late payment in the last year and a charge-off in the past 2 years. Sophia has a total of seven credit accounts and an eight-year credit history. Her $5,760 in total revolving balances represents 67% credit utilization. Her FICO 9 stands at 609, which is considered "Fair."

Here’s how the same credit actions will affect Sophia’s FICO score:

  • Miss a payment by 30 days: Drop by up to 39 points with a resulting score between 570 and 590.
  • Miss a payment by 90 days: Drop by up to 49 points with a resulting score between 560 and 580.
  • Take out a $5,000 personal loan: Drop by up to 19 points with a resulting score between 590 and 610.
  • Max out credit cards: Drop by up to 49 points with a resulting score between 560 and 580.

Important FICO Score Lessons

While these point loss scenarios are hypothetical, they do give us some valuable information about FICO score losses.

  • Higher credit scores lose more points for negative credit actions. In the two scenarios above, Maria, who started with a higher credit score, lost more points for the same actions as Sophia.
  • A late payment hurts previously clean credit profiles more than one that already includes a history of late payments.
  • Maxing out credit cards has a bigger impact on scores that previously benefitted from low credit utilization.
  • Recent delinquencies can make it harder to raise your credit score in the short term. While helpful in the long run, positive actions may be dampened by recent late payments or charge-offs.

How your credit score responds to credit actions depends on the information in your credit profile before that action. Your credit score may respond differently to certain credit actions, even if you have the same credit score number as one of these scenarios.

To get a better idea of how certain actions will affect your FICO score, check out the free FICO estimator tool.

How to Improve Your Credit Score

You can raise your credit score by showing that you’re no longer a credit risk. That means making all your payments on time, avoiding serious delinquencies, lowering high credit card balances, and avoiding new accounts. There’s no shortcut to raising your credit score, but consistent positive actions—and avoiding the negative ones—will slowly improve your score over time.

Article Sources

  1. MyFICO. "Changing the Score." Accessed Nov. 9, 2020.

  2. MyFICO. "What is a Credit Score?" Accessed Nov. 9, 2020.

  3. Wells Fargo. "Three Key Advantages of a Strong Credit Score." Accessed Nov. 9, 2020.