Checking The Pulse Of The Kansas City Real Estate Market

You’ve heard me mention many times how important your FICO score is when it comes to buying a Kansas City home. The problem has always been that no one knew exactly how your FICO score was formulated.  In other words, we KNEW our FICO score but we didn’t know what exactly we’d done – or were about to do – to damage it (or improve it). Yes, there were educated guesses and common sense analysis came into play. There were even some crazy case studies done to see how certain credit factors impacted one’s FICO score. It’s great that there were a few out there willing to take one for the team and damage their own FICO score to provide us beneficial info.  But I’ve always wanted to know more about the closely guarded FICO algorithm. Well recently some of the secrecy was removed when Fair Isaac Corporation released some hypothetical FICO hit examples. They call them Damage Points and here’s a look at a chart that’s  been circling the internet…

Kansas City Credit Score Damage Points

You can see in the above chart, they have used two hypothetical FICO scores — one person starting with a 680 FICO score and the other with a 780. The first thing I noticed was the common theme of the person with the higher initial score taking a more severe hit for an identical infraction.  For example, notice how a foreclosure would knock at least 85 points off the 680 score BUT 140 off the 780 score!  John Ulzheimer, a credit industry expert, also did a study on his own FICO score using the FICO Score Simulator. If you go there, you must buy a credit report to test it out yourself. But if you want some free results, John Ulzheimer’s findings on his own FICO score concluded: a 10 point FICO hit for applying for a new store credit card; a 40-75 point FICO hit for missing a credit card payment (on a card that was current); a 50-100 point FICO hit for maxing out ALL credit cards; a 195 to 255 point FICO hit for declaring Bankruptcy. Very interesting stuff! You can also view the rest of John Ulzheimer’s findings.

Posted by Jason A. Brown