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FICO 10/10T Changes Could Lower Your Credit Score

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Senior Contributor

Re: FICO Changes Could Lower Your Credit Score

From what I read as long as you don’t turn around and run your revolving debt back up you’re OK though. Thoughts?










(Forgive typos, mobile.)(Everything said is Just IMHO.)
Scores updated DEC'19.

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? (clean/dirty), Number of accounts open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AoYR-Age of Youngest Revolver (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new accounts, with open loan on record.
If you don't know where you fall, just list whether you have any baddies, your number of open and closed accounts, AoOA, AoYR and whether you have a loan on record.
For utilization questions, list individual and aggregate utilizations, revolving and installment. please.
Message 41 of 118
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Moderator Emeritus

Re: FICO Changes Could Lower Your Credit Score

Well look at it a different way; we found that AOYA is really age of youngest revolver when it comes to FICO 8.

That metric being reset is a straight negative, and yet opening an installment account which is literally increasing debt (unsecured) immediately is not... rationally from a risk analysis perspective how does that even track?

Personal loans used to be few and far between: most major banks still don’t offer them. The rise of P2P lenders and now many loan options following them grants new data to be looked at.

Changing credit market = changing risk analysis.

I really fail to see what the big deal is.



        
Message 42 of 118
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Senior Contributor

Re: FICO Changes Could Lower Your Credit Score

Makes sense.










(Forgive typos, mobile.)(Everything said is Just IMHO.)
Scores updated DEC'19.

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? (clean/dirty), Number of accounts open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AoYR-Age of Youngest Revolver (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new accounts, with open loan on record.
If you don't know where you fall, just list whether you have any baddies, your number of open and closed accounts, AoOA, AoYR and whether you have a loan on record.
For utilization questions, list individual and aggregate utilizations, revolving and installment. please.
Message 43 of 118
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Established Contributor

Re: FICO Changes Could Lower Your Credit Score

Ooowweeee. Another toy!  Now “who will be in the 1%” Smiley Indifferent  This thread could go on and on with what ifs.  I find it fascinating.

 

At this point my only question is how far back they'll go back to create the “1st” 10T score. Last 5 years? 10 years?

 

I would think some lenders already use trended data.  Credit card companies, personal loans.....how do they really decide how much credit to give you?  It is what it is but will definitely be interesting.



FICO 8 as of 02/05/20
FICO 9 as of 02/08/20
AoOA - 23Y11M | AAoA - 11Y9M | AoYA - 0Y5M
Open: 8 CC | 2 RC | 1 PLOC | 1 MTG loan | 1 Auto loan
Closed: 1 MTG loan | 1 Auto loan | 2 RC
Message 44 of 118
Highlighted
Senior Contributor

Re: FICO Changes Could Lower Your Credit Score

24 months that’s all the CRAs keep.










(Forgive typos, mobile.)(Everything said is Just IMHO.)
Scores updated DEC'19.

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? (clean/dirty), Number of accounts open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AoYR-Age of Youngest Revolver (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new accounts, with open loan on record.
If you don't know where you fall, just list whether you have any baddies, your number of open and closed accounts, AoOA, AoYR and whether you have a loan on record.
For utilization questions, list individual and aggregate utilizations, revolving and installment. please.
Message 45 of 118
Highlighted
Senior Contributor

Re: FICO Changes Could Lower Your Credit Score

But that only makes sense because fico algorithms are designed to predict the risk of your default in the next 24 months, from what I’ve read.










(Forgive typos, mobile.)(Everything said is Just IMHO.)
Scores updated DEC'19.

In order to better answer your questions and record your DPs, please provide your profile stats: Any baddies? (clean/dirty), Number of accounts open and closed on CRs (thick/thin), AoOA? (aged/nonaged), AoYR-Age of Youngest Revolver (new accounts/no new accounts)? Open/closed loan on CR?
For example, mine is clean/thick/aged/new accounts, with open loan on record.
If you don't know where you fall, just list whether you have any baddies, your number of open and closed accounts, AoOA, AoYR and whether you have a loan on record.
For utilization questions, list individual and aggregate utilizations, revolving and installment. please.
Message 46 of 118
Highlighted
Valued Member

Re: FICO Changes Could Lower Your Credit Score


@iced wrote:

@rgninja wrote:
https://www.cnbc.com/2020/01/23/fico-10-credit-score-changes.html

I don't see many banks jumping to switch to this model since implementing it cost them money but this new scoring model could drive so many people over the financial edge.

How does this cost banks money or drive people over the financial edge?

 

The way I read this, as one person put, is that utilization will have a memory under the new model. People already spending themselves into oblivion will continue to do so; it's just that lenders might get a bit more of a warning without having to have had historical data on that user on-hand already. If anything, this might save them money in the long-term, and the banks that cater to higher-risk people in return for higher interest rates...well, I suspect they'll just keep on doing that regardless of this new score.


What I mean by costing them money is having to train and implement new underwriting standards is all. As for how this could drive someone over a financial edge. You get a bank that decides you are a risk, closes your accounts or balance chases. Your scores are going to tank since even if you are paying your bills all Fico sees is maxed out cards. Now you are in a position of being a high risk even though you are paying your bills on time and you have no cushion should an emergency happen since your credit tanked. Let's be honest most people don't PIF and don't have the means to pay off a card that been closed. This reeks of 2008 all over again since I was reading recently about jumbo mortgage defaults on the rise.

Message 47 of 118
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Established Member

FICO 10?

Not sure if this is on any other boards but thought this may be interesting to discuss:

https://www.yahoo.com/money/fico-credit-score-change-210252419.html

 

I apologize if this is not in the right category.

Message 48 of 118
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Regular Contributor

Re: FICO Changes Could Lower Your Credit Score

On CBS this morning a credit expert just said getting personal loans or installment loans will not be good for you. So in addition to having a new account (which is already a slight ding), simply borrowing money is frowned upon as other posters have highlighted. Her example was people who take out a personal loan to pay off other credit card debt may actually see a decrease. 

 

She said banks wanted to know what would happen in a downturn of the economy and this model was formulated to give banks a more clear picture of your overall debt risk not simply if you somehow manage to pay on time each month. 

 

She also said the new model will use trend data dating back 30 months to see of any patterns in debt behavior instead of just 1 month. 

 

Also new lates will hurt you more than they did in the old systems (which was already quite a bit lol). So it seems paying on time is even MORE important if that was even possible. 


FICO 8 Scores (Actively rebuilding)

FICO 9 Scores

Inquiries (12/24): EX: 2/2 | TU: 2/2 | EQ: 0/1
AoYA: 2 months | AAoA: 8+ years | AoOA: 12+ years
New Accounts (24 months): 3
14 months until completely clean credit files!

Goal Cards:


Scores started in low 500's | Signature last updated 2/4/20
Message 49 of 118
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Valued Contributor

Re: FICO Changes Could Lower Your Credit Score


@rgninja wrote:


What I mean by costing them money is having to train and implement new underwriting standards is all.

OK, I can see that costing them some.

 


@rgninja wrote:

As for how this could drive someone over a financial edge. You get a bank that decides you are a risk, closes your accounts or balance chases. Your scores are going to tank since even if you are paying your bills all Fico sees is maxed out cards. Now you are in a position of being a high risk even though you are paying your bills on time and you have no cushion should an emergency happen since your credit tanked. Let's be honest most people don't PIF and don't have the means to pay off a card that been closed. This reeks of 2008 all over again since I was reading recently about jumbo mortgage defaults on the rise.


The definition of risk is being on the edge. Making regular payments without reducing the balances over time is treading water, and a person treading water is already a high risk to default as anything from AA to a job change/loss to an unexpected expense would be enough to knock that person over said edge.

Message 50 of 118
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