Understanding FICO Scores

11 Pages Posted: 7 Nov 2019

See all articles by Gregory B. Fairchild

Gregory B. Fairchild

University of Virginia - Darden School of Business

Christina Black

Independent

Liz Ivaniw Jones

University of Virginia - Darden School of Business

Tierney Fairchild

Independent

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.

. . .

Keywords: FICO, credit score, credit report, finance, financial planning, decision-making, Resilience Education

Suggested Citation

Fairchild, Gregory B. and Black, Christina and Jones, Liz Ivaniw and Fairchild, Tierney, Understanding FICO Scores. Darden Case No. UVA-F-1866. Available at SSRN: https://ssrn.com/abstract=3438630

Gregory B. Fairchild (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/fairchild.htm

Christina Black

Independent

No Address Available
United States

Liz Ivaniw Jones

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Tierney Fairchild

Independent

No Address Available
United States

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