Understanding FICO Scores

Abstract

David Simmons is a waiter at a struggling Italian restaurant located down the block from where he lives. Money is tight for him right now, as his limited income means he lives paycheck to paycheck. However, David knows things will look up for him soon because he was recently offered a job as a bank teller across town—his first desk job.This case helps students learn about building credit. The case addresses what a FICO score is, who computes it, how it is determined, and what it is used for. Excerpt UVA-F-1866 Aug. 6, 2019 Understanding FICO Scores Introduction Sitting in his tiny apartment, David Simmons sighed and rubbed his forehead after opening the last two bills in his mail pile—the ones hidden behind the new Sports Illustrated issue on his desk. Money was always tight with David, given his inconsistent income as a waiter at a struggling Italian restaurant down the block. He knew how to prioritize and avoid paying his bills as long as possible. He was not proud of being late on some bills, but he occasionally did it out of necessity to make ends meet. The most important bills came first. He had already paid his rent, electricity, water, gas, cell phone, and insurance bills for this month; however, there were two bills remaining to be paid. David unfolded the late warnings from Cox Cable and his Bank of America Visa credit card and laid them on his desk. Threats more than bills, David thought. He had never been this late on any bills before. Both letters claimed that not paying the required balance within a week would lower his credit score. . . .