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And knowing the point effect of a credit flaw is easier to understand than the percentage drops that we have known for some time now.

Just recently, the good folks at the Fair Isaac have drawn back the curtain to give us a glimpse of the real drop in points that each credit mistake will have on your score. Percent change is equal for each derogatory item. Better original scores will have larger actual point deductions. Although the number changes based on the original score, the percent change is always equal.

Let’s take a look at the chart that they published:

As you can see, a maxed out credit card will have your score drop by up to 45 points if you started with a 780 score - but only 10-30 points with a starting score 100 points below that.

This profile is based on someone with a mortgage, various credit cards, auto loans and student loans; and less credit diversity may be affected differently for the same type of negative item. The less types of credit you have, the more a damage point will impact your score.

Interesting information, especially for Atlanta home buyers and those looking at refinancing. Good credit, then, is relatively simple to maintain. Pay early, open few new accounts and pay down the balances.

It’s a tough economic time right now, and several people have asked me about turning to a debt consolidation service to help them out from under the significant credit card debt they may find themselves under.

In my experience, debt consolidation companies do not do anything that you could not effectively do on your own. Others go bankrupt - but you are being responsible and working with a debt consolidator to pay your bills; yet your score plummets between 45 and 125 points, and lenders now view that action exactly the same as a chapter 13 bankruptcy.

As debt consolidation companies can be bad, a reputable credit repair company can be advantageous. You can tackle cleaning up negative items yourself; though many people turn to expert credit repair companies to help them clean up a faulty credit report. Contact me and I will let you know the very best credit repair folks to work with. Having referred people to numerous credit repair companies over the years, I know the good ones from the bad ones.

So, if you are wanting Atlanta refinance or home buying information, this revelation from FICO should take some of the mystery out of the credit scoring models.