FICO® 10 Score Changes: What You Have to Know About The New FICO® 10 Scores

Rachel Morey
Last Update: July 13, 2021 Credit Report Financial News Loans

The FICO® Score 10 suite of updates could cause millions of consumers to see their FICO scores drop. This is the biggest update to the scoring model since 2014 when Fair Isaac Corp. released FICO® Score 9.

FICO® 10 uses scores between 300 and 850 to give lenders an idea of whether an applicant is creditworthy. Lower scores indicate a higher risk of defaulting on a loan or making late payments.

While previous versions of the FICO scoring model gave more “weight” to new information, FICO® Score 10 includes information they call “trending data.”

In addition to the five main factors considered with FICO® Score 9 (payment history, age of credit history, amounts owed, new credit accounts, and credit mix), trending data gives lenders a more specific idea of how consumers handle their financial affairs.

Potential lenders approve or reject applications based in part on an applicant’s credit score. The FICO score offers a quick way to determine whether a consumer is statistically likely to pay off their debt as promised. Those with a lower FICO credit score may present a higher risk of default to lenders.

What is FICO Trending Data?

Trended data is a snapshot of information in your credit report over the past 24 months. This rolling window offers creditors a chance to see how you’ve managed each of your credit accounts during the past two years.

If you have open credit card accounts, your trending data will show your balances, the amount you paid each month, and minimum payment requirements. Borrowers who pay off their credit cards in full each month, often called “transactors,” may be seen as more reliable and responsible by potential lenders. Those who carry a balance from month-to-month often called “revolvers,” may see their FICO scores drop due to the FICO® Score 10 updates.

How to Make Trending Data Work For You With FICO® Score 10

If you can afford to pay off your credit card balances each month, now is a great time to implement that habit. It’s more important than ever to pay every creditor on time each month, as well. There are rewards over time for bringing your credit card balances down to zero each month and building a history of perfect on-time payments.

Late Payments Can Wreck Your Credit With FICO® Score 10 

Missing a payment due date by more than 30 days means your lender will report the delinquency to at least one (if not all three) of the major credit reporting bureaus. That late payment stays on your credit report for seven years. Missing even one payment under FICO® Score 10 could knock as much as 100 points off of your FICO credit score. That late payment will hurt your credit score history, making 35% of the FICO score criteria. With trending data in the mix, it could hurt your score even more severely.

The best way to avoid making a late payment is to set up a monthly automatic payment with your credit card company. If you are uncomfortable giving out your bank information, most banks use the automatic bill pay feature offered free-of-charge.

Getting A Personal Loan to Pay Off Credit Card Debt Isn’t the Right Move Under FICO® Score 10

In general, paying off heavy credit card debt with a personal loan is considered risky financial behavior. Many consumers reap the rewards of a better credit score but can’t resist the temptation to use the credit cards they just paid off. With a new monthly payment for a personal loan plus monthly credit card bills, they may miss payments or be unable to keep up with their other financial obligations.

Paying off expensive high-interest credit card debt with a low-interest personal loan only works in the borrower’s favor if they have the willpower and financial stability to avoid using the credit cards after paying them off.

It takes good credit to qualify for a low-interest personal loan, though. If you already have bad credit, it’s better to concentrate on paying down your credit card debt and fixing any accounts in collections than it is to go searching for a personal loan. If you are credit-challenged, FICO® Score 10 could bring your scores down even more, so keep an eye on your accounts, so you don’t accidentally miss a payment due date.

How FICO® Score 10 Affects Healthy Credit Scores

If you have great credit, you may see your score go up slightly under FICO® Score 10. The newest scoring model tends to boost healthy credit and penalize those with bad credit. Consumers with good financial habits that include paying credit accounts and loans on time each month, limiting the amount of debt they roll over from month to month on credit cards, and applying for new credit sparingly have nothing to fear under FICO® Score 10.

How To Improve Your FICO Credit Score With FICO® Score 10

If you don’t use Experian Boost to help you get credit for paying normal monthly bills like utilities and rent, this may improve your credit scores under FICO® Score 10.

You can start by logging on to the Experian website. Go through the signup process for Experian Boost to find out if your bank participates in the program. On average, Experian Boost users see their FICO credit scores go up by 13 points right away.

You’ll need at least six months of verifiable credit history with loans, revolving accounts like credit cards, or a mortgage before you can get a FICO credit score. Experian Boost helps those with short credit histories add information to their credit files with Experian and increase their credit scores with FICO and VantageScore.

Your lender will choose whether to use an older version of the FICO scoring model or FICO® 10. While you can’t control whether they’ll approve or deny your application for new credit, you can take responsibility for your credit reports by checking them each a minimum of once per year. Make sure there aren’t any mistakes, and if you find accounts you don’t recognize or errors, let the credit reporting bureau know right away.

You can get a free copy of each of your three credit reports with Experian, Equifax, and TransUnion by visiting AnnualCreditReport.


Rachel Morey

Rachel Morey is a journalist specializing in automotive, insurance, and finance content. She has been writing professionally for nearly a decade and has projects in print and broadcasting. A native Iowan, Rachel as a special fondness for the open roads of rural America.

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