I'd conjectured this before but your thinking sort of drives it home @greg_the_egg : utilization percentage really is a useless metric under 10T.
That can always be gamed with the luv button and I'm sure lenders are aware of this. Also installment debt isn't counted under that at all... hard to say how the base FICO 10 will look at stuff but 10T I strongly suspect is just going to go off dollar value. Where this is truly cute is it doesn't matter what that actual base dollar is: someone who's living far larger than I am with possibly even smaller credit limits than I have, as long as our payment patterns (PIF) are the same month to month they'd get hit a lot harder under any FICO model in existence and that changing would be winning for us.
Did see in the WSJ article that it was trailing 24 months which seems like a long time to me but as one of the interviewed said it's about smoothing out the changes over time. I have two revolving balances out of 18 open revolvers, and one of them over 30% of my individual limit and I drop 20 points on a mortgage score? An entire mortgage tier when absolutely Chase and DCU and probably every other lender paying attention that I can cut a check for that balance (and actually did but I didn't overpay it to get it to $0)? Bad FICO, I get it's the standard but I'm not an increased risk, at all, with that balance hanging out from last month.
Sure I can shrink it down to get back pretty again if I had to, though over 760 I'm not going to sweat it even after opening the conversation with Chase about a refi yesterday but the average consumer, or to be honest, the 99.99% consumer? Doesn't understand this in the detail I do, not even close. Why should they? This is something nobody should have to care about as much as arguably any one of us do on this forum.
- Miss a payment recently: big credit slap
- Debt increasing over time: smaller credit ding
That second one catches changing payment patterns I suppose too, but anyway that's such a simple metric that everyone could understand without fancy calculations or anything else. Pay your bills on time, pay more than the minimum and get out of debt (or at least high interest debt), and your credit score will reward you. Credit and good financial health finally in lockstep across the entire debt spectrum which it is absolutely not today (unfortunately).
Benefit to humanity indeed... of course then you have FICO who will probably complicate it in the name of data, again, and meh.
If they get right though, this is going to be really good in my opinion. I haven't been a FICO cheerleader as a general rule, but this could be excellent.
Yeah there's spot on NPR's Marketplace podcast too.
I still think some are missing the bigger picture but at least it's getting some attention. Of course my local station is not airing it cause politics.
According to an article published today by TPG, "The way FICO scores are calculated is changing pretty dramatically, and it could lower your credit score."
The article goes on to say, "FICO 10 T — the new reporting version — will place a greater weight on missed payments, meaning that consumers who have fallen behind on repayments will likely see a drop in their credit score. On the plus side, consumers could see a credit score increase if a delinquency is over a year old."
