credit & debt

Changes Are Coming to Your Credit Score

FICO’s newest model takes a long-term look at how you’ve managed credit.

FICO, the credit-scoring giant, is adjusting how it calculates its three-digit key to your creditworthiness. Consumers who have rising levels of credit card and other debt could see their FICO scores take a hit. But if you already have an above-average score, it may get even healthier.

With its new FICO 10 T score, FICO incorporates “trended data,” reviewing a consumer’s account balances and payment activity on loans and credit cards over the past 24 months. If you steadily pay off debt over time, that has a positive effect on your 10 T score.

Paying the full balance on your credit card each month is also good for your score, says Ted Rossman, of Or, if you pay only the minimum amount due for a while and later bump up your monthly payments, that also helps your score, he says.

Plus, certain short-term changes in account activity may not hurt your score as much as they would have in the past. Say that you typically use a small percentage of the credit available to you on a credit card (a low credit-utilization ratio improves your credit score) and pay off the full balance monthly. But then you book a vacation with your card, racking up a big balance and carrying some of it to the following month. The 10 T score views that event as an anomaly, and it may not harm your score as much as it would under previous models. The use of trended data “creates a smoothing effect” over such blips, says Joanne Gaskin, vice president of scores and analytics at FICO.

On the flip side, paying off a big chunk of credit card debt to decrease your credit-utilization ratio—especially if you take out a personal loan to do it—won’t likely give your score as quick of a boost as under previous models. And recent late payments may be more heavily penalized.

FICO says that credit card and auto lenders that require a minimum score of 680 (on a scale of 300 to 850) may approve about 6% more applicants under 10 T compared with FICO 8, a model that lenders commonly use now.

Lenders are usually slow to take on new scores, so it could be years until FICO 10 T is broadly adopted. And the fundamental advice to maintain a strong credit score hasn’t changed: Pay your bills on time, keep your credit-utilization ratio low and apply for new credit sparingly.

How FICO scores have evolved

Every five years or so, FICO updates its credit-score formula. Each version builds on the previous one. Here are the new features that FICO added to each of its three latest score models.


➜ Released in 2009 and commonly used by lenders today.
➜ Using a high percentage of available credit on a credit card is more heavily penalized.
➜ A single late payment isn’t as detrimental to your score, but numerous delinquencies are more harmful.
➜ Collection accounts with original balances of less than $100 are ignored.
➜ Becoming an authorized user on a stranger’s credit card through “trade-line renting” has little benefit.


➜ Released in 2014 and gaining wider adoption by lenders.
➜ Paid-off collection accounts are ignored.
➜ Unpaid collection accounts related to medical debt have less of a negative impact.
➜ Rental-payment history is considered when included on a credit report.


➜ To be released mid to late 2020.
➜ Incorporates “trended data,” analyzing the past 24 months of balances and payment activity on credit cards and loans.
➜ Recent late payments may be penalized more harshly.

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