Dear Liz: Our FICO score is above 900. When we retired and moved to Oregon, our previous landlord in California imposed false charges against our security deposit that we refused to pay. The landlord has since turned the account over to a collection agency that indicates it will notify all three credit agencies of this outstanding amount. How will this affect our FICO score?
Answer: The top FICO score is actually 850. If the last score you saw was over 900, you probably were looking at a VantageScore, which isn’t used by as many lenders.
In any case, your scores probably will drop if the collection agency follows through on its threat. How much they’ll drop depends on the rest of your credit history, how much the collector says you owe and which version of the FICO formula a lender happens to use (the latest, FICO 08, excludes collections under $100).
Typically, though, collections are considered a serious negative that can easily knock your score out of the “prime” range.
This is why you don’t let disputes go to collections. You would have been better off paying the landlord under protest and then suing him or her in Small Claims Court.