How many mistakes can really hurt your credit score


This isn't quite the falling of the Berlin Wall, but in the credit scoring world, it's close. Apparently, for the first time ever, FICO, the company that has its famed credit scoring model, has released details on how a financial goof-up actually affects your credit score.

First, before I go on, credit for making credit scores a little less mysterious goes to Liz Pulliam Weston, a prolific and well respected columnist with MSN Money. She asked FICO for details on how they determine how late fees, bankruptcies, foreclosures and so on affect one's credit score, and they decided to actually be upfront about it. Or at least more upfront than they used to be.

Every time you make a financial mistake, these are known as "damage points." And the higher credit score, the more points these mistakes will cost you, which is interesting. In other words, the slide descending into bad credit can be faster and more pronounced than someone already on their way down.