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How I Ruined My Credit Score

And what you can do to protect yours


spinner image george mannes in a comical pose setting fire to his credit report with a zippo lighter
The author, saying goodbye to decades of good credit scores.
CHRIS BUCK

In June 2022, I had a credit score of 826 — a number that FICO, the U.S. company that issues most of these scores, deemed “exceptional.”

One year later, I had a score of 670 — a 156-point drop, putting me on the brink of “fair,” a euphemism for “think twice before you lend any money to this guy.”

The trigger for this decline wasn’t poverty or irresponsibility, I’m happy to say. It was curiosity.

A credit score is meant to tell lenders how likely you are to repay what you borrow. A score can have a big impact on your expenses and quality of life, influencing the interest you’ll pay on a mortgage or auto loan — or whether you’ll get one at all. It can also affect which homes you can rent and the cost of your car insurance.

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But information about what exactly makes your score rise and fall, and by how much, can be maddeningly vague. FICO (short for Fair Isaac Corporation) lists five variables it uses to calculate scores; 35 percent stems from payment history, for example. But that tells me absolutely nothing about how many points my score will drop if I miss a payment.

Since FICO won’t comment on individual situations, I made a rash decision: The only way to find out what would ruin my credit score was to ruin my credit score. What would move the needle, and how much would the needle move?

Some background: My credit history goes back decades. I don’t have a mortgage. I don’t have a car loan. I pay off my credit card balances monthly, and I haven’t missed a payment in years. I began this test pretty certain that I had no impending transactions that would involve my credit score.

Here’s what I learned.

Lesson 1

I have several different credit scores to ruin.

Fixing your credit score: 4 don’ts and one do

DON’T pay upfront to have your credit score fixed. “If a company promises they can repair your score, you should view that skeptically,” says Jeff Richardson of VantageScore.

DON’T open up a new account if you’re maxed out on others. Multiple negative effects generally outweigh the possible benefit of a new account, says Experian’s Rod Griffin.

DON’T expect that paying off your mortgage or car loan will help your score. “You’re rewarded for recent management of installment accounts,” says consultant John Ulzheimer.

DON’T close a credit card once you’ve paid it off. Losing the available credit for that account, says Griffin, increases your overall utilization rate, temporarily lowering your scores.

DO pay your credit card bills on time, and work to lower your balances. “Even if you have a low usage ratio,” Ulzheimer says, “having a lower one is even better for your score.”

I knew I had more than one credit score, but I was shocked to find out just how many I have: about 40. One reason is that FICO has several different scoring formulas. The most common is FICO 8, which rates you on a scale from 300 to 850. But there are also older and newer versions of that formula, numbered from 2 to 10T, along with versions specifically tailored to mortgage lenders, auto lenders and credit card issuers.

Another reason I have so many scores is that FICO and VantageScore — a credit-scoring rival of ­FICO’s — each have three separate sources of data: the credit reporting bureaus Equifax, Experian and TransUnion. Those bureaus collect information from lenders about people’s borrowing and payments but don’t calculate scores. Instead, they leave that to FICO and VantageScore, whose formulas can spit out different numbers depending on the data that’s fed into them. So I had three different FICO 8 scores to track: 810 based on TransUnion data, 822 from Equifax and 826 from Experian. The VantageScore version I began following, drawn from TransUnion, was 811.

Lesson 2

Focus on ranges, not points.

Soon after I first peeked at my scores, my VantageScore dropped 7 points, to 804. The reason: I was now using 8 percent of my available credit, up from 4 percent the week before, doubling what’s known as my utilization rate. My total debt — the credit card bills I had yet to pay — had jumped to $3,371. One of my FICO scores dropped 10 points; another dropped 4. A few weeks later, after I paid off one of my cards, two of my FICO scores rose 3 points; the third rose 8.

In fact, over the following months, my scores often bounced up and down based on bits of info that landed at one or more of the bureaus. (Not all creditors report to all bureaus.) Which raised a question: How big must a drop be before it matters — before it results in, say, a higher interest rate on a new mortgage or a rejected credit card application? It’s “situational,” says Tom Quinn, vice president of scores at FICO. What matters more than the size of the drop is whether you fall below a cutoff used to evaluate your credit­worthiness — a line that lenders can draw anywhere. So if a lender sets the cutoff between average and below-­average credit at 680 and your score is 679 or 681, a 2-point move can be a big deal. On the other hand, if your score is 795, a 25-point move either way might be meaningless.

Lesson 3

Forget common sense.

FICO warns people with a short credit history against rapidly opening a lot of accounts: “Even if you have used credit for a long time” — that’s me! — “opening a new account can still lower your FICO scores.” So in September I applied for a new card to see if that would ding my score. The effect was minimal; two FICO scores didn’t change at all.

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Well, what if I went nuts and applied for three more cards? I did just that. Within three months, the total of my credit card limits had more than tripled, from $35,000 to $110,000. Certainly alarm bells would go off! But once all three cards hit my credit reports, my three-FICO average was a mere 1 point lower than it was three months earlier. My VantageScore had risen — from 787 to 810.

What happened? Common sense might tell you that the more credit cards you have, the more damage you can do, acknowledges John Ulzheimer, a consultant who works as an expert witness on credit cards in court cases. But, he adds, “Scores aren’t based on common sense. They’re based on empirical data.” Apparently, the credit scorers’ computers are convinced that someone like me isn’t a risk, even if he goes from three cards to seven cards in about a month. “Opening up several credit cards could be deemed risky for certain profiles,” says VantageScore spokesperson Jeff Richardson.

Lesson 4

Little payments count a lot.

If four new cards didn’t hurt me, how bad could it be to skip a payment? On one of the cards, I owed $104 on a bill due Dec. 15. Instead of the minimum payment of $40, I sent in $35. I charged $15 apiece on two other cards in December but didn’t pay the January bills at all. Nor did I pay the January bill for the first card, on which I had a lingering balance of $70.

By the end of January, only the $70 had shown up as past due on my credit reports. That was enough. The average of my three FICO scores dropped 81 points, to 719. Goodbye, Mr. Exceptional. My VantageScore tanked even worse, down 121 points, to 686.

I had been paying off my old credit cards completely and on time — in fact, more than $5,700 in December (the remnants of a dream vacation). In the grand scheme of credit card bills, I thought, my unpaid $70 shouldn’t count for much.

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Well, try telling that to the credit scorers. “It’s less to do with how large the dollar amount is than the fact you missed the payment,” says Rod Griffin, Experian’s senior director of public education and advocacy. What really hurts, Richardson says, is letting a delinquency linger for 60 or 90 days.

I paid my two $15 charges, but the other account’s issuer closed and zeroed it out before I could make good on it. Oddly, the company later reinstated my card, no questions asked. FICO then raised one score 15 points because I’d added a new account. (As Ulzheimer says, scores aren’t based on common sense.)

By early May, my credit reports showed I was paid up on all my accounts. Meanwhile, I was skipping payments on my fourth new card to see if things could get any worse.

They could. After a nonpayment in June, my FICO average, which had crept back up to 725, fell to 692. When I paid off that card, closing it and two other new ones, it slipped even further, to 684.

Lesson 5

There are consequences.

As I write this, my average FICO score is 697. According to a credit score simulator on FICO’s site, if I spend normally and make all my payments on time, I can bump my score up to 749 … two years from now. Getting back to 800 could take seven years, says Ulzheimer, because that’s how long federal law lets missed payments stay on your record. “The only thing you can do about the delinquencies,” he says, “is not add new delinquencies to your credit report.”

The balance that one issuer forgave? I may owe taxes on it, since the IRS treats forgiven debt as income. And the card company might still sell the debt to a third party that will try to collect it, Ulzheimer says.

And now to my final lesson …

Lesson 6

Don’t try this at home.

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