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The Inside Scoop on FICO 10T

Back in January the creators of the FICO score, Fair Isaac Corporation, announced changes coming this summer to the methodology used in measuring consumers’ credit worthiness. In summary, consumers with growing debt levels, or those who have fallen behind on loan payments, will be scored more harshly under its newest version, FICO 10T.

So, what was the catalyst for this new, juiced-up FICO score? In a pre-COVID economy, consumer confidence hummed along and personal debt in America increased by $2.3 trillion over a 10-year period. As we rounded out a decade of living in an expansionary market, some lenders began to shift in their seats and wonder, “How much runway do we really have left here, and is the current credit scoring system truly the most accurate representation of an individual’s creditworthiness?” As outstanding debt levels (in nearly every debt product) have increased by double-digit percentage points since 2009, FICO scores are also at record highs.

While it’s nothing new to see an updated FICO score (in fact, they offer an updated version nearly every 5 years), FICO 10T is breaking scoring system norms. Typically, a traditional FICO score takes into account your most recent month’s debt levels, but FICO 10T will look back on at least two years of data. This new system is intended to be a more accurate indicator of consumers who manage debt well, and those who do not. Generally speaking, a person with a score of 680 or higher (who practiced good debt management skills to get there in the first place) will see a bump in their FICO 10T score, assuming they continue to pay their debts regularly. On the other hand, the person with a score of 600 or lower, who habitually accumulates debt and falls behind on payments, will see a greater decline in score.

You’re probably wondering, ”Gee…why are you sharing this with us now in the midst of a global pandemic? Don’t we have enough to worry about?” And I hear you! I share my commentary because the financial planner in me wants to get you thinking about how to succeed under the new scoring system. At the same time, you do have some breathing room. The new version will technically be available for use by the three major credit bureaus this summer, but it could take large lenders up to a year to adopt changes (if they decide to at all; they have the option to stay with an “old school” version like FICO 8 if they so choose).

So, what are the main ways to set yourself up for credit score success, particularly under FICO 10T? (These habits certainly won’t hurt you under any FICO version, by the way).

  1. Watch your debt utilization ratios! It is best to use less than 30% of your card’s credit limit. If you have a month of high credit card usage, try paying towards the balance throughout the month to keep your ratio within a healthy range.
  2. Have a disciplined payment plan for any personal loans. For example, if you transferred credit card debt to a personal loan but then began running a balance on your card once more, you are likely to be dinged extra under FICO 10T—they take personal loans…very personally.


Equifax, Experian and Transunion are all offering free weekly credit reports through April 2021, so it is a great time to check in and give your credit report a little TLC. And, if your credit has been impacted as a result of COVID-19, you can also add a 100-word explanation regarding your situation. Click here to learn more.

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