How much less secure is an algorithm that gives feedback that the password is one character off?
Let's assume that there are $95$ possible characters for a password. Thus, there are $95^n$ possible $n$ character passwords. You would like for brute force to take on the order of that many guesses to get right, $O(95^n)$.

In your case, given the additional information, once you know you have all characters right except one, it takes only an additional $95$ calls to get the exact password. So, attacking this would take $95^{n-1}+95=O(95^{n-1})$ work.

So, basically it decreases the security by one character.