Business Case Studies & Business Publications

FICO Score

Eades, Kenneth M.,...

Case

FICO Score

Eades, Kenneth M.; Fairchild, Gregory B.; Maiden, Stephen E.; Jackson, Sam

F-1909 | Published September 17, 2019 | 14 pages Case

Collection: Darden School of Business

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This case teaches students the importance of maintaining a strong FICO score by illustrating the consequences of paying bills late or not at all. The protagonist is David Molina, a receptionist at a gym located down the block from where he lives. Money is tight for Molina right now—his limited income means he lives paycheck to paycheck. However, Molina knows things will be looking up for him soon because he recently accepted a job in a personal trainer training program—his first big step toward his ultimate goal of becoming a personal trainer and owning his own gym. Molina has been putting off paying two credit card bills, both of which are late and have been issued, this time, in the form of threats to impact Molina’s credit score if he doesn’t pay them. He has just enough money to afford the minimum payments on each overdue bill. But then he receives a phone call from his friend, Jim Lindsey, reminding him about an invitation to go to Myrtle Beach for the upcoming weekend. Molina knows he cannot afford it, but a woman he’s attracted to, Jessica, will be there too. Should Molina put off the bills yet again, and if so, how exactly will being late on them hurt his credit score?

This case is designed to be taught in a financial literacy course for non-MBA audiences. The expectation is that the instructor will use the case as a vehicle for students to learn the importance of their credit history and FICO score. This case puts the students in the role of deciding whether Molina should delay payment of his two bills and examines the consequences.