February 26, 2015

Modeling Impact of Some Example Credit Changes on FICO Score Using MyFICO Score Estimator

I decided to use the MyFICO credit score estimator to model some changes in credit usage and see what kind of impact it might have on a FICO score. 

The basic starting point I'll use is my own personal situation.    I will then run the estimator again with changed information to see what kind of impact to the FICO estimate such changes might give me.

Keep in mind that this is just one example scenario and its just an estimator.  So this is not at all exact and your own results may vary.   The impact of changes will also vary depending on where your score starts as well.

My current score as of Feb 2nd reported by Discover card is 816.

Here is my current situation roughly and how I answered the questions : 
I have over 5 cards
My oldest card > 20 yrs
My first loan was 15-20 years ago
I've gotten 0 cards in last year
most recent 6 months ago
I've got a balance on 0-4 cards
The total balance is $1-5k
I have no missed payments
0 card are past due
The ratio of my current balance / credit limit is 0-9%.
I've got no bankruptcy or foreclosures

Starting with that info the estimator says my score should be 770 - 820.      So my actual score falls within their predicted range.

Scenario 1 :  Applying for 3 new cards

I'm going to rerun the estimator and this time tell it that I've applied for 3 cards in the past 3 months.
I keep all the other options the same.

The resulting estimate is now 745 to 795

This gives me an estimate that applying for 3 new cards may cut your FICO by ~25 points.

Scenario 2 :    Using a lot of cards at the same time

In this scenario I'm assuming that I use a lot of cards and will say I have balances on 9 different cards.

Estimated score is 750 to 800.    Spreading usage over 9 cards instead of 0-4 drops the FICO by ~20 points.

Scenario 3 : Adding a large balance on a card of ~20% of limit

I've got a large total credit card limit of over $100k.   What happens if I were to put $20k on  a credit cards, say to take advantage of some 0% interest promotion?

All else equal that will give me a estimated score of 740-790.   That drops the FICO by ~30 points.

Scenario 4 : Missing a payment and getting 30 days overdue

Lets say I forget or goof up and somehow miss a payment.   Mistakes happen.

That will give an estimated score of 680 - 730 which is a hefty drop of ~90 points on the FICO.


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