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Irregularities In Credit Management Hurt High Credit Score Holders More

By Sally Maison
Published: Wednesday, June 16th, 2010

CRTS-00086591-001Every consumer knows that if a person is irresponsible with their credit usage and debt limit it will have severe consequences on that persons credit score. Consumers would like to know by how many points their credit scores are affected by changes in their credit report.

FICO scores managed and marketed by Fair Isaac gave consumers a fair approximation of the changes expected in the credit points with regard to bad credit usage. Consumers who do not regularly repay loans will be subjected from 40 to 110 points extra if the payments are 30 days late. If payments are more than 90 days after the deadline, consumers are at a loss of 70 to 135 credit points. Credit points can be reduced to up to 240 points for claiming bankruptcy.

Craig Watts, a Fair Isaac representative said, “The lending industry tends to regard an account differently when it has become 90 or more days late, the likelihood that consumers will resume paying their overdue obligations drops off significantly after the delinquencies have reached 90 days.”

Credit Bureaus avoid answering question based on the amount of change in credit points based on the irregularities in credit management as there are many factors which influence such decisions.

“If you picture someone who has just one mortgage and one other credit account versus a mature credit user like me with 15 accounts, if they miss one payment that would impact their scores a lot more,” Experian’s Maxine Sweet, vice president announced. “For me, one missed payment would just be a blip.” Experian said that different consumers react differently to different loan rates. Consumers with better credit scores are more prone to mistakes with their credit report as even small irregularities have a large impact on consumers with higher credit points, compared to someone who has a lesser score.

“When a deed-in-lieu or short sale is reported as a partial payment, it’s treated as a serious delinquency,” Watts said, “just like a foreclosure.” Consumers with good credit scores are under the assumption that their good scores cannot be affected by their mistakes in credit management. Even a person with good credit can have it turn bad in a matter of seconds.

The biggest fear a consumer faces with their credit scores is going completely bankrupt, which would annihilate his credit score.

Land owners and employers use credit reports to determine if a person can buy the house or be offered a job. SO a good credit score is very important.

Experian’s vice president Sweet encourages consumers with low credit scores to trim out unnecessary expenses and to clear the debt as soon as possible.

“You need to do what you need to do to get your finances back in order,” Sweet said. “Don’t worry about your credit score.”

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