The New Fico Scoring Model: Fico 10/FICO 10T– What’s Changing?

image- Jan 29, 2020credit, Credit Scores0 comments

Fair Issac and Co., the company that created the Fico score, announced in a recent press release that they will make available their newest scoring model Fico 10 this upcoming summer.

Your Fico score is one of the most important assets you have in your financial life. Therefore, when Fico makes changes to the scoring model it’s always big news! Fico estimates that over 80 million consumers will see more than a 20 point change to their credit score in either direction with the new Fico 10 scoring model! In this post, we will discuss what Fico claims to be changing with the new model so you can know what to expect once the score is released.

Trended Data

The big change will be Trended Data. Until now, no Fico score calculated trended data as part of the scoring model. With the new Fico 10T, trended data will be included.

What Is Trended Data?

Trended data gives lenders the full balance picture from the last 24 months, rather than just the last month’s data.

For example, Let’s say, you maxed out your credit cards and then slowly started to climb out of the debt. For the last 6 months, your debt started to fall from month to month, and you’re currently only 60 percent maxed out. Your credit utilization will be currently at 60%, but it’s trending downwards.

Your friend has lately gotten a terrible shopping habit, and over the last six months is slowly building up extreme balances. He/she is currently hitting 60% utilization on all his/her credit cards. His/her credit utilization is the same 60% as yours, but the difference is that s/he is trending upwards.

Now when you both apply for a new credit card, who is a more risky borrower? You or your friend? The answer is most likely your friend. That is because you are slowly climbing out of the mud, but your friend is currently sinking into the mud…..

With the current Fico scoring models, you and your friend will score the same, since you’re both at 60% utilization. With trended data, this will change. Fico 10T will not only look at the current utilization. It will look back at your balance history and summarize you’re activity of the last 24 months as well.

Why It Matters

The fact that Fico did not calculate trended data in the current scoring models has many times been to the advantage of the consumer. Even if a consumer had a big purchase once or twice, or for whatever reason needed to max out their credit cards, as long as that balance was paid up before applying for a mortgage or credit card, etc., there were no problems. Fico only calculated the current balance. But with the new Fico 10T scoring model, high balances may affect you for a full 24 months! For many consumers, this will make it take much longer for them to put their dirty deeds passed behind them.

Personal Loans

With the new FICO 10 scoring model, personal loans will be viewed as a negative factor at least in cases where the consumer continues to accumulate credit card debt after obtaining the payoff loan.

Nothing Is Happening So Fast

Even if Fico is already releasing the new scoring model this summer, let’s remember that lenders do not adapt to the new models so fast. The previous scoring model, Fico 09, which was already released in 2014, is still not in use by most lenders. And when it comes to mortgages, the even older Fico 04 model is still in use. So as things are trending, you can still live a nice amount of healthy years before these changes have any effect on your financial life.

If you’ve got any questions about the new Fico 10/fico 10T model or about anything discussed in this post, please leave a comment and I will respond.

Was this article helpful?

image
Sam Sam has nearly a decade's worth of experience educating his many readers on everything credit. Sam spends his days checking out credit cards for a full report, from the minute benefit details to the shebang of welcome bonuses. Plus studying the ins and outs of building proper credit. It’s his favorite pastime and he loves sharing it with others.

Leave A Comments

This site uses Akismet to reduce spam. Learn how your comment data is processed.

0 Comments

Recent Posts

Follow us

image

Click here to subscribe to
our WhatsApp channel

Todays
best offers

image

Chase Ink Business Preferred

Earn 100,000 points after $15,000 spent within the first 3 months.

more info
image

Chase Ink Business Unlimited

Earn $750 (75,000 points) after $7,500 spent within the first 3 months. Intro 0% APR for 12 months on purchases.

more info
image

JetBlue Card

Earn a total of 100,000 points after a total of $6,000 spent within the first 12 months. See offer details for full offer. Intro 0% APR for 12 months on balance transfers.

more info
image

Chase Sapphire Preferred

Earn 60,000 points after $4,000 spent within the first 3 months.

more info

You May Also Like

8 Actionable Tricks for Quick Credit Score Improvement

8 Actionable Tricks for Quick Credit Score Improvement

Ever seen a 4 year old do one of those “it’s not fair” tantrums? (No? Good for you…) What I’m gonna say may (or may not!) lead to a similar reaction, but don’t fret- it can be worked out! So, here it goes… Did you know that even if you never missed a payment your...

read more
Where Can I Find The Most Accurate Credit Scores?

Where Can I Find The Most Accurate Credit Scores?

What’s sweat-inducing, hair-raising and spine-chilling for men and women alike? Credit scores. Yep, those intangible & non-physical numbers that determine our lending options, insurance quotes, job opportunities and even the fact of having a roof over our head....

read more
Average Age of Credit History -True or False

Average Age of Credit History -True or False

If you ever reviewed your credit report using Credit Karma, Wallet Hub, Nerd Wallet, etc., you may have noticed that they all break down your credit history based on the average age of credit history taken from all your trade lines combined. For example, if you have a...

read more
The 5 Most Important Factors In A FICO Score

The 5 Most Important Factors In A FICO Score

The FICO score model is the mostly widely used scoring model. As per Fico, as much as 90% of lending decisions that are done using a scoring model, use the Fico scoring model. In this post we will discuss the 5 most important factors that Fico would look at in order...

read more
Why Are My Credit Scores Different?

Why Are My Credit Scores Different?

When people check their credit score, should it be by Credit Karma or on their Discover statement, etc., they look at the three-digit number. They take it as a fact that this is their credit score. Period. The same way they know their age and weight, they feel that...

read more
Credit Scores And Mortgages: Here Is What You Need To Know

Credit Scores And Mortgages: Here Is What You Need To Know

Shopping for a mortgage but got bad credit? You are not alone! I invited a great mortgage expert Chaim Tarkieltaub from Mint Capital to explain the differences between the different mortgage products available for consumers at all stages of credit. Let’s explore the...

read more
image

Download link sent
succesfully

Got it*please check your promotional inbox
image

Error sending download link

Try Again