FICO Score Changes Will Hit Debt-Burdened Consumers Hard—Eventually

New model looks at debt carried over time, how personal loans are used

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Your incredibly important FICO credit score is being recalculated. Lenders will be able to pull a credit score that shows how you’ve managed (or struggled with) credit over time, rather than in a given month.

On Jan. 23, 2020, Fair Isaac Corporation, the company behind your FICO credit score, announced it’s rolling out several updates to how it calculates its crucial three-digit credit rating scores with the introduction of the FICO Score 10 Suite, which will be available summer 2020. The last time FICO updated its credit scoring model was in 2014 when it released FICO 9. 

There are two new FICO score models in the suite: FICO 10 and FICO 10 T. FICO 10 is an updated model that lenders can easily transition to for improved credit scoring, but FICO 10 T will use 24 months of trended, historical data to paint a bigger picture of how consumers are managing debt and credit over time, which is where the “T” comes in. Earlier FICO scoring models are based on a one-month snapshot of consumer credit information, so this broad look at how credit and debt are managed over a longer period of time is a big shift. 

“Our ability to look at credit is now more granular, which gives us greater perspective into how consumers are really behaving based on everything going into their credit profile,” Dave Shellenberger, vice president of scores and predictive analytics for FICO, told The Balance in a phone interview.

This is potentially unfavorable news for consumers who are falling behind with debt repayment, struggling to keep credit card balances in check, or seeking too many lines of credit. Meanwhile, consumers with good credit (670 FICO score or above) may actually see a boost to their score.

“It is very good news for consumers who are actively managing their credit profile and taking steps to improve it,” Shellenberger said. “When we look at scoring those consumers with FICO 10 T, about 40 million consumers will see an increase of 20 points or more. That’s pretty significant."

However, these changes won’t have an instant impact, as it takes lenders time to adopt new FICO scoring models. For now, here’s what you need to know about the new FICO score calculations and how your own credit rating may be affected down the road.

What Is Changing

The FICO 10 T credit scoring model will look at a few elements of consumer credit reports less favorably:

Routinely High Credit Utilization Ratios & Rising Debt Balances

A high credit utilization ratio (the percentage of total debt you’re carrying compared to total available credit) isn’t a new red flag for lenders, but the FICO 10 T score gives that statistic even more weight if credit card balances hover close to set spending limits for an extended period of time. It’ll also look at how your debt balances have changed—and if they’ve been climbing over time.

“Previously we have only really looked at the most recent balance for that important information,” Shellenberger said. “Whatever has been reported by the credit card company is what that score is based on. But now we can look at how that has trended over the past 24 months. It looks at averages rather than one or two points in time where your balances were higher.”


This means if you typically keep balances in check except for one or two months out of the year where your utilization temporarily jumps, such as after holiday shopping or a vacation, those temporary highs will hurt your score less in the long term. 

Personal Loans Used To Carry More Card Debt 

This is the first time a FICO scoring model looks closely at how consumers are using personal loans to see if there is reason to penalize a borrower. 

“We are now able to distinguish personal loans from other credit obligations, so we can look at personal loans along with everything else that’s going on in your credit profile,” Shellenberger said. 

For example, if you transfer credit card debt to a new personal loan account but then use your freed-up spending limits to accumulate even more debt, that may ding your FICO 10 T score.

“The FICO score has always taken balance-type information into account and that’s still a critical component.” 

Missed and Late Payments

Payment history has always been an important factor in FICO credit score calculations, but the trended data scoring model gives missed payments even more weight. That means if you’re falling behind on your payments more and more each month, or have stopped making payments altogether, your score may take an even bigger hit. 

What’s Behind These Changes

FICO’s primary goal is to help lenders make more precise credit application decisions. Scores based on trended data that represent how consumers manage credit over time may reduce the number of loan defaults. They may also help lenders more confidently approve applications for new loans, mortgages, and credit cards based on credit scores in this debt-ballooning environment, according to Shellenberger.

The national revolving debt balance (which is made up mostly of credit card debt) reached a record-high level of $1.088 trillion in October 2019. The most recent national revolving debt balance was $1.086 trillion in November 2019.

Meanwhile, average credit scores in the U.S. have also reached an all-time high. As of September 2019, the average FICO score in the U.S. was 706. This juxtaposition may indicate that a more comprehensive approach to credit scoring is needed for both lenders and consumers. Cardholders aren’t shying away from carrying balances, but concerns about an economic growth slowdown may already have banks preparing for missed payments and delinquencies in the near future. Credit scores based on predictive data over time can help lenders safely avoid unexpected credit risk and higher default rates.

“The data shows us that consumers who are highly indebted do tend to represent higher default risks,” Shellenberger said.

What This Means for You

For starters, don’t panic. While these FICO scoring changes are big news, it will likely take lenders a while to adopt the new model. Most lenders still use FICO 8, which was released back in 2009. Until that changes, your credit score and how it fluctuates is business as usual.

“The new score will be available from all three credit bureaus by the end of the calendar year. Equifax will adopt it by the end of this summer,” Shellenberger said. “Larger institutions move slower because they have to do more system integration. It could take up to two years before some lenders fully adopt FICO Score 10 or 10 T.”

Regardless, this news further emphasizes just how important it is to pay off credit card balances each month. Use the latest FICO scoring model as motivation to create a structured debt repayment plan to reduce your credit card balances—and keep it that way. 


Take inventory of your credit cards and then take steps to eliminate your credit card debt altogether.

Continue to practice other smart credit management habits, too, such as making on-time payments and spending within your means so that you don’t turn to credit cards or personal loans to float a lifestyle you can’t really afford.

“Don’t take out or use more credit than you really need,” Shellenberger said. “That advice hasn’t changed and if anything, it has become even more important to follow than ever before.”

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. FICO. "FICO Score Evolution."

  2. FICO. "FICO Introduces New FICO Score 10 Suite."

  3. Board of Governors of the Federal Reserve System. "Consumer Credit - G.19: Consumer Credit Outstanding (Levels)."

  4. FICO. "Average U.S. FICO Score Ticks Up to 706."

  5. FICO. "Which FICO Score Version Matters to Me?"Accessed Jan. 23, 2020.

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