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FICO 10/10T Changes Could Lower Your Credit Score

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FICO 10/10T Changes Could Lower Your Credit Score

https://apple.news/ApRm08ggITm6pU-oA7aEBMA

Interesting reading.

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Starting Scores 05/2019: EQ:519, EX:525, TU:574
Message 1 of 118
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Re: FICO Changes Could Lower Your Credit Score

I believe the most important part is this:

 

"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."

 

I've seen "consumer finance accounts" as a negative indicator, but now it appears that it will carry even more weight than it has before. Where you could previously (and currently until new version is implemented) move credit cardf debt to a personal loan for a boost, that will likely no longer be the case. Also, in regards to a consumer shifting to increasing card balances over time, I'm curious as to how the utilization plays into that. For me, I tend to carry 1 - 3 %, but when I receive additional 0% APR promo offers, my balances increase to just under the 8.9% threshold, but sometimes a little higher if I know I won't be applying for credit anytime soon.

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Message 2 of 118
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Re: FICO Changes Could Lower Your Credit Score


@greg_the_egg wrote:

I believe the most important part is this:

 

"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."

 

I've seen "consumer finance accounts" as a negative indicator, but now it appears that it will carry even more weight than it has before. Where you could previously (and currently until new version is implemented) move credit cardf debt to a personal loan for a boost, that will likely no longer be the case. Also, in regards to a consumer shifting to increasing card balances over time, I'm curious as to how the utilization plays into that. For me, I tend to carry 1 - 3 %, but when I receive additional 0% APR promo offers, my balances increase to just under the 8.9% threshold, but sometimes a little higher if I know I won't be applying for credit anytime soon.


Not happy! Good information and write up. Smiley Happy

 

Gives us some lead time to be aware and potentially take some form of action if so required! Smiley Mad

Message 3 of 118
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Re: FICO Changes Could Lower Your Credit Score

https://www.forbes.com/sites/lisettevoytko/2020/01/23/report-fico-credit-score-adjustments-could-hur...

 

I couldn't read the whole article due to no subscription but found this if interested. 

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Re: FICO Changes Could Lower Your Credit Score

Thanks @GApeachy

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Message 5 of 118
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Re: FICO Changes Could Lower Your Credit Score

No, thank you. I was wondering when 10 might roll out, or was in the works.
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Message 6 of 118
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Re: FICO Changes Could Lower Your Credit Score


@GApeachy wrote:
No, thank you. I was wondering when 10 might roll out, or was in the works.

Even after it is released, it might be a while after that before lenders start actually start using  it. Many lenders still use fico 8 when 9 has already been released.

Message 7 of 118
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Re: FICO Changes Could Lower Your Credit Score

I just read this on another site and was going to post it. Seems like utilization may start to have some memory from the way I read this article.

 

https://www.wsj.com/articles/fico-changes-could-lower-your-credit-score-11579780800

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Next Goal all over 800
Message 8 of 118
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Re: FICO Changes Could Lower Your Credit Score


@Andypanda wrote:

@GApeachy wrote:
No, thank you. I was wondering when 10 might roll out, or was in the works.

Even after it is released, it might be a while after that before lenders start actually start using  it. Many lenders still use fico 8 when 9 has already been released.


And this begs the question: When do these flavors of FICO scores become the new "gold standard"?

 

As it stands now, FICO 8 is still the mainstream score when one thinks FICO scores. It's score that will be referenced for most card or personal loan decisions. It's the score prominently provided by most paid monitoring services.  This despite the more recent FICO 9 flavor that was developed. That version still seems to have a more niche following by lenders. 

What will drive the change away from FICO 8 being the standard?  Is is simply lender adaption that drives this?

 

 

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Message 9 of 118
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Re: FICO Changes Could Lower Your Credit Score

"FICO for the first time will place more weight on personal loans in a way that penalizes some borrowers. For example, consumers who transfer credit-card debt to a personal loan but continue to rack up credit-card balances will likely experience a bigger drop in their credit scores."

 

@greg_the_egg's post has the most important paragraph, I think. (Different from the one above.)

 

So the 'T' in 'FICO 10 T' is for 'Trended Data'.

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Testing aggregate utilization greater than 8.99% but less than 9.00%. It's treated the same as 9.00%.

Message 10 of 118
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