FICO 10/10T Changes Could Lower Your Credit Score

[Anonymous]

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@Anonymous wrote:

Hi

I just read in Forbes the new version FICO 10 will be out this summer.  It is expected to lower our credit scores.  Am I the only person who thinks this is unfair?   Why are Americans accepting this?  How can they make changes that will affect millions of Americans in a drastic way?   We're all on this  site because we care about our credit and want to live the American dream.  We pay our taxes and provide for our families.  We come in different colors and ethnic backgrounds but we all want the same thing.   However it seems the harder you work, the harder you fall.   Why is FICO allowed to change the scoring system at will?  Especially when the change is detrimental to the American People.  According to Forbes, credit scores will be dropping.    Has anyone seen a petition regarding this?  If so, I will sign it. 

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They are changing it to more accurately reflect risk over time with 10T and they are adding personal loan factors to regular 10. I personally view these changes as good ones but I'm already doing pretty well based on the trending scoring system that is already out, VantageScore 4, because I always have a spike 3Q-4Q of the year and then a rapid pay down. 

The wild swings that FICO is known for will get smoothed out. Also, not everyone will be taking a credit score hit. Plenty of people will get an increase. It all hinges on your balances over time. If you're someone who gets a new card and maxes it out and then proceeds to take a year to pay it, it's going to suck for you in the short term. If you're someone who rarely carries balances, your scores should actually go up. 

From the original article "Consumers with already-high FICO scores of about 680 or higher who continue to manage loans well will likely get a higher score than under previous FICO versions. Those with already-low scores below 600 who continue to miss payments or accumulate other black marks will experience bigger score declines than under previous models."

"Unlike previous FICO scores, 10 T will assess how consumers’ debt levels have changed during the past two or so years. FICO scores so far have reflected consumers’ balances during roughly the most recent month tracked. This change will place more weight on rising debt levels. Consumers who previously paid their credit-card bills in full but shift to carrying growing balances for several months will likely end up with a lower score. On the other hand, consumers who tend to increase card debt during a specific month each year and then pay it off quickly will likely experience a smaller drop in their score than they currently do."

[Anonymous]

Thanks for the update. i apologize in advance if it's already been addressed, how does this work for the many of us with student loans? 1) I have 90 day lates from 2013 & 2014 only baddies on my file 2) despite paying $600+ a month my balance hasnt seemed to go down very much in the past 4 years.  

[Anonymous]

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@Anonymous wrote:

Thanks for the update. i apologize in advance if it's already been addressed, how does this work for the many of us with student loans? 1) I have 90 day lates from 2013 & 2014 only baddies on my file 2) despite paying $600+ a month my balance hasnt seemed to go down very much in the past 4 years.  

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"Having outstanding student loan debt, in and of itself, is not going to significantly damage or negatively affect your score."

https://www.google.com/amp/s/www.cnbc.com/amp/2020/01/27/ficos-new-credit-score-wont-ding-you-for-student-loans-or-mortgages.html

Its more the payment history that is being focused on as always. 

[Anonymous]

thanks. Well hopefully my delinquencies  will be gone soon enough.

[M_Smart007]

I could see Cap1 using FICO10 1st

[Revelate]

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@M_Smart007 wrote:

I could see Cap1 using FICO10 1st

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Possibly or Synchrony or one of the deeper subprime lenders.

I was personally surprised to see US Bank on FICO 9 the other day.  It's hard to say, what I really want to see is if it brings some lender like Chase back into the FICO fold, if that happens you know 10T is the real deal for the market but to be fair I don't see that as likely.

[Anonymous]

https://www.investopedia.com/fico-10-and-fico-10t-5072531

• FICO 10 Suite is the newest FICO credit scoring model, consisting of two scores: FICO 10 and FICO 10T. 
• The FICO 10T credit score includes trended data, which looks at individual consumers’ payment and debt history for the previous 24-plus months to help calculate their credit scores. 
• According to FICO, the new model is the most comprehensive scoring model created by the company to date. 
• FICO 10 and FICO 10T don’t replace other credit scoring models, such as FICO 2, 4, 5, 8, or 9, which lenders can still use in making credit approval decisions.

I don't think it is that bad.

"The FICO Score 10 Suite is designed to be the most predictive and comprehensive credit score model developed by FICO to date, allowing lenders to better measure risk for credit decision-making. A key feature of FICO 10T is the use of trended credit bureau data on individual borrowers to calculate their credit scores, providing a more complete picture of their potential credit risk.1 

According to FICO, the new credit scoring models could help lenders reduce default rates on credit cards and auto loans by 10% and 9%, respectively, compared with FICO 9. For mortgage loans FICO estimates that the FICO Score 10 Suite could reduce defaults by 17%.1"

[sarge12]

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@Anonymous wrote:

Hi

I just read in Forbes the new version FICO 10 will be out this summer.  It is expected to lower our credit scores.  Am I the only person who thinks this is unfair?   Why are Americans accepting this?  How can they make changes that will affect millions of Americans in a drastic way?   We're all on this  site because we care about our credit and want to live the American dream.  We pay our taxes and provide for our families.  We come in different colors and ethnic backgrounds but we all want the same thing.   However it seems the harder you work, the harder you fall.   Why is FICO allowed to change the scoring system at will?  Especially when the change is detrimental to the American People.  According to Forbes, credit scores will be dropping.    Has anyone seen a petition regarding this?  If so, I will sign it. 

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That depends on who you are including in those called "our". I do not expect it to harm my score by using trended data. I expect my habits of always PIF and always having low utilization to prevent any score damage, and maybe even increase scores. My point is, trended data is harmful only if such things as utilization are only optimized before credit pulls. My overall amount of debt is always fairly flat with a slight decline over time as the installment debt is paid. Of greater concern to me, is what the fact that all installment debt will be paid off within 12 months. I could stretch out my mortgage to almost 2 years by just making the regular payments, but I doubt I will do that. In January of 2022 the mortgage will be down to 4000 dollars or less, and the temptation to pay it off will be too great. My mortgage is about 8500 now, and drops 500 with each payment. I expect to pay all credit cards to 0 before paying off the mortgage, but I always PIF so that is no big deal. Only then can I declare myself 100% debt free. First up though, is the 1 car loan in my name, but actually paid by my Niece. It will be paid off in 3 days...on April 2nd. I do expect a fairly large drop in scores due to only revolving debt being active, but my need for credit will be nil. It actually already is, as I could pay it all next week. The added taxes that it would cost me to withdraw the 8500 from my 401k prevents me from doing so.

[sjt]

Is there an ETA on when we can get access to our FICO 10 scores?

[Mr_Mojo_Risin]

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@sjt wrote:
Is there an ETA on when we can get access to our FICO 10 scores?

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I read on here probably last summer different members saying they thought Covid slowed down the 

roll-out of it. Idk if that's true.

I'm really interested in FICO 10 myself though.