FICO Shock!

[inpain66]

As most of you know I am in a financial disaster. I am at the point where I cannot pay minimums on most of my debts.

my bank has the free FICO score service so I looked. The last FICO score was from June. In June I was up to date on all of my bills. In fact I have never in my life had a late payment until August. My FICO score was 605 in June. I am SHOCKED. WHy so low then? I was never late in my life. My score now must be really bad.

I have spent the past few weeks thinking I could pull myself out somehow and not have to file. Now I know that I must file!

If my FICO was that bad in June then I will never be able to recover from where it must be now.

I am going to try to save as much money as I can and use my tax return to file chapter 7. I am under the median and in deep debt and now I know it is the only way out.

I am not going to be ashamed anymore. I did everything right. I went to college, got good grades, have worked full time since. I gave it my best shot and filing is the only way.

[AngelinaCat]

You have nothing to be ashamed of. You are making a sound business decision. You aren't the only one in this spot, and I am afraid that this economy is going to get worse before it gets better.

My best~~

[BassBoy]

One thing you need to understand about your credit score is that it is not based solely on your ability to pay on time. Sure, that helps, but a large portion of your score is based on your debt to income ratio, the amount of debt you have, the amount owed on your CC's and if the balances are close to your limits. So, if you have a few CC's and a few loans, the most of your income is for repaying debts, therefore, your score may be lower than you have expected.

Once you file BK and the debts are gone, your credit will take a hit, but after time, your score will be up. Plus, if you take small steps to rebuild, like a lower limit CC, that will raise your score even more.

[halloweendmb1]

One thing you need to understand about your credit score is that it is not based solely on your ability to pay on time. Sure, that helps, but a large portion of your score is based on your debt to income ratio, the amount of debt you have, the amount owed on your CC's and if the balances are close to your limits. So, if you have a few CC's and a few loans, the most of your income is for repaying debts, therefore, your score may be lower than you have expected.

Once you file BK and the debts are gone, your credit will take a hit, but after time, your score will be up. Plus, if you take small steps to rebuild, like a lower limit CC, that will raise your score even more.

I disagree with your statement; the FICO score has nothing to do with your debt to income ratio. Your FICO score has no clue how much money you earn nor does it care. I was paying about $2000 a month in just min. payments on 18 cc and had a fico in the low 700 range. 35% of your score is payment history 30% of your score is how much debt you care month to month such as cc. Any balance over 30% of the available limit will hurt your score. I deal with credit reports everyday for my job in mortgages and I can promise you your debt-to-income ratio is not known by FICO. They don't know if you even have a job to be honest. The credit score model is a joke & it is unfortunate getting a mortgage is now more than ever so heavily dependent upon it.

[Doghouse]

Agree with Halloween, FICO has nothing to do with debt-to-income. I had high FICO scores even when I was unemployed but still paid my bills. Until I stopped paying all CCs last month I had only had one late payment over 30 days. When I bought my house in 2005 my score was 780. Three years and about 110K in CC and personal loan debt and my score dropped to 625 because I am about 95 - 100% on ALL my credit card limits. I stopped paying all bills last month and one month later I am at 575. <Sigh>.

[rockyroad]

Mine went from 746 to 687 when AMEX entered a collection on a Biz card I personally guaranteed to my personal report.
There's no acct. number or history listed, just says AMEX collection.

[halloweendmb1]

AMEX is the worst and they just applied for the TARP money how ironic they have the worst cllection praqctices and they want federal aid for bad debt. hmmm...

[inpain66]

If FICO does not look at debt to income ratio then how was my score only 605 in June? I never ever made a late payment until August!

Now that I am falling behind my FICO is prob really low!

[GreenInkOnPaper]

Go to www.myfico.com

The FICO scoring model is complex -- Age of accounts, how many accounts, mix of accounts, balances compared to limits, etc. I've been told that carrying a balance of 9% of the limit on your cards is the ideal. Again, there is no debt to income consideration.

I had a 735, maxed out my cards and dropped to 599, no late pays. Yep.

[TEW]

The one thing that will drag your FICO down in a heart beat is inquiries. About 3 years ago I went into a car dealership and bought a car. The woman that did the financing told me it was going to take a while because she was having trouble with her computer. Evidently she kept hitting submit or what ever button and was making hard hits on my credit history. With in a week my score had dropped over 100 points. I was able to get those hits taken off but the score was slow to recover.

[GreenInkOnPaper]

TEW- Thanks for adding that. I forgot about inquiries.