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For years, consumers have had little knowledge about how credit scores were calculated and what negative actions would affect their credit scores. Thanks to some recently released information from FICO, developer of the most widely used credit score, we know a little more about how many points will be lost from some of the most common mistakes.

Two FICO Scenarios

To illustrate the lost points, FICO gives us two hypothetical credit scenarios, one of someone with a 680 FICO score and another of someone with a 780 FICO score.

The person with the 680 score has:

· Six active credit accounts, which consist of three credit cards, an auto loan, a mortgage, and a student loan

· Eight years of credit history

· A 40% to 50% credit utilization

· Two late payments, a 90-day late credit card payment two years ago and one 30-day late payment on the auto loan one year ago

· No accounts have been sent to collections and there are no public records (bankruptcy, foreclosure, etc.)

The person with the 780 FICO score has:

· Ten active credit accounts, which include seven credit cards, an auto loan, a mortgage, and a student loan

· Fifteen years of credit history

· 15% to 25% credit utilization

· No late payments ever

· No collections or other public records from

Although the above scenarios are hypothetical, you can quickly see how one person can develop an outstanding credit score while another creates one 100 points lower. By law consumers are entitled to one free credit report each year from each of the 3 credit reporting agencies. These free reports do not show the specific credit number, but that can be obtained for a small additional fee

http://www.myfico.com/CreditEducation/CreditScores.aspx