He also said that the FICO Score determines how much weight to give delinquencies by assessing three dimensions: recency, severity (for how long has the account been delinquent), and frequency (how many times has the person been reported late on this and other accounts). Several 30 day delinquencies would influence the “frequency” assessment. If the 30 day delinquencies were consecutive – the account went late just once but for 90 days, for example – the “severity” assessment would be affected.
So, it’s hard to give you a precise answer as to how much this will impact your husband’s score. But it will have an impact.
The best way to turn things around, of course, will be if your husband’s friend builds a steady history of paying on time.
How much does a co-signed loan affect credit? My husband co-signed a student loan for a good friend, and the friend has had several 30 day lates on the account. How much will that affect his score?
Hey there Matt,
This is a great, to the point article. A couple of things to point out and perhaps clarify for your readers.
In the first paragraph you discuss the difference between a 760 and 639 or below FICO score and the impact that may have on an interest rate. That is extremely true on a conventional loan. FHA & VA loans do not penalize for above 640, and minimally below 640.
Also, When ordering the credit reports from any of the online bureau agencies, don’t be surprised to see that your scores don’t match the mortgage company scores exactly. When a consumer orders their own report & score it is a general score. The mortgage companies, auto dealers, and insurance companies run credit and have scoring models specifically designed for their industries. The main point is that there will be some differences to be aware of when pulling your own credit reports.
I do agree that it is a good idea to review your credit before making major purchases to address any obvious corrections you feel you need to make.
thanks!
Nicole –
I checked with Craig Watts, Public Affairs Director at Fair Isaac. To see how much a 30-day delinquency might affect a typical consumer’s FICO Score, he recommended looking at this page: http://www.myfico.com/crediteducation/questions/Credit_Problem_Comparison.aspx.
He also said that the FICO Score determines how much weight to give delinquencies by assessing three dimensions: recency, severity (for how long has the account been delinquent), and frequency (how many times has the person been reported late on this and other accounts). Several 30 day delinquencies would influence the “frequency” assessment. If the 30 day delinquencies were consecutive – the account went late just once but for 90 days, for example – the “severity” assessment would be affected.
So, it’s hard to give you a precise answer as to how much this will impact your husband’s score. But it will have an impact.
The best way to turn things around, of course, will be if your husband’s friend builds a steady history of paying on time.
How much does a co-signed loan affect credit? My husband co-signed a student loan for a good friend, and the friend has had several 30 day lates on the account. How much will that affect his score?
Thanks for these clarifications, Joshua. This is really helpful.
Hey there Matt,
This is a great, to the point article. A couple of things to point out and perhaps clarify for your readers.
In the first paragraph you discuss the difference between a 760 and 639 or below FICO score and the impact that may have on an interest rate. That is extremely true on a conventional loan. FHA & VA loans do not penalize for above 640, and minimally below 640.
Also, When ordering the credit reports from any of the online bureau agencies, don’t be surprised to see that your scores don’t match the mortgage company scores exactly. When a consumer orders their own report & score it is a general score. The mortgage companies, auto dealers, and insurance companies run credit and have scoring models specifically designed for their industries. The main point is that there will be some differences to be aware of when pulling your own credit reports.
I do agree that it is a good idea to review your credit before making major purchases to address any obvious corrections you feel you need to make.
Thanks for the great information Matt!