How Do Delinquencies Affect FICO Score?

Almost everything that you don’t do makes an impact on your credit score. If you don’t make payments on time, if you don’t pay outstanding bills, if you don’t pay your utility bills, if you don’t pay your credit card bills – all these and more have a bad effect on your credit score. To help consumers improve their scores or rather stop consumers from doing things that decrease their score, FICO has given an insight into how delinquencies affect your score and also the time it takes for your score to recover from these mistakes. The insight focuses on two score profiles – one that has already exhibited risky behavior and the other that is high because of safe and careful behaviour.

To reach a score of 780, a consumer has to work hard to keep his or her credit report clean. They would have always paid their bills on time and outstanding bills would not be a phrase in their lives. So, when such a consumer makes a mistake that results in foreclosure, their score goes down by nearly 150 points. This drop in the score is true for not only foreclosure but also for short sale and settlement too. In case the consumer declares bankruptcy, the score drops down by nearly 240 points, which is quite substantial.

On the other hand, a consumer with a score of 680 does not suffer as much as he has already exhibited risky behavior. Therefore, his score, in case of foreclosure or short sale drops by approximately 100 points.

As the consumer with a high score has always been careful, FICO is not “forgiving” in their case for any lapse as compared to the consumer with a lower score. When the drop in the score is low, recovery is faster and the delinquency appearing on the credit report is also not severe.

Recovery from foreclosure for a consumer with a score of 680 has been given as 3 years, 7 years for a consumer with a score of 720 and 780, which is a considerable length of time. In case of a 30 days late mortgage payment, it is 9 months for a person with 680 score.

So, if you are one of those people who has a high score of 720 or 780, then FICO will not forgive your for any lapses. You will have to pay dearly and work harder to get your score back to pristine condition.