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    What You Need To Know About The Upcoming FICO Credit Score Changes

    FICO 10T is the latest version of the formula that the three main credit bureaus use to calculate your credit score.

    When it is implemented in late 2020, there are several effects it could have on your score. 

    • The factors that go into calculating your credit score will not change later this year. 
    • What will change is the weighting that the new version of FICO gives to some of them.
    • Late payments, credit utilization, and personal loans will all have a greater influence on your score from the final quarter of 2020 onwards.

    Read on to take a closer look at these changes and how they will affect your credit score.

    Late Payments Will Have More Of An Impact 

    Missing your payment due date has always been a bad idea where your credit score is concerned.

    FICO10T will penalize you even more for late payments.

    • Payment history counts a full 35% toward your FICO score and is the biggest single factor involved in calculating it. 
    • The extra weighting that this factor will receive starting in late 2020 makes timely payments more important than ever before.  

    Credit Utilization Rates Will Matter More

    Credit utilization measures how much of your total available credit limit you are using at a given time.

    The higher your utilization, the lower your score. 

    • You can calculate this figure by dividing the total balances on all your credit cards by the total available balances. 
    • As this factor becomes more important with FICO 10T, you will want to pay down your credit balances as much as possible before the end of 2020. 

    Trended Data Is Becoming A Factor 

    One of the big changes that the new FICO scoring system will bring about is the use of trended data. 

    Instead of providing a simple snapshot of your credit situation on the day your score was calculated, it will also contain information about your credit usage habits.

    • Trended data may include your tendency to pay off your full outstanding credit balance each month or opt to only pay the minimum. 
    • This means that you will need to practice responsible borrowing and repayment year-round to keep your score at a desirable level. 

    Personal Loans Will Be Factored In 

    Having a personal loan may count against you as of late 2020.

    The new FICO scoring system may penalize you slightly for taking out personal loans - but they are still useful in some situations. 

    • Being penalized for having a personal loan should not discourage you from using this type of credit to refinance high APR credit card debt. 
    • You will want to avoid applying for loans unless you have a good reason for needing the funds. These include refinancing or paying for unforeseen events and emergency medical costs. 

    How Will FICO 10T Affect My Credit Score?

    The new scoring system is not going to change the basics of managing your credit well - but there is going to be less flexibility for those who don’t. 

    • Your score will drop if you have a high credit utilization rate or if you skip payments or take out more personal loans than necessary. 
    • You will also see a drop in your numbers if you keep a high revolving credit balance and put off paying down your debts over time. 
    • Overall the new scoring system will reward consistently good credit habits and penalize bad ones. That is why it is important to establish good financial habits before FICO 10T comes into effect. 

    What Can I Do? 

    If you have been paying your bills on time, keeping your credit balances low, and only borrowing funds when necessary, you will want to keep up these good habits in late 2020 and beyond. 

    • It may take a while for lenders to adopt the new FICO scoring model - and that gives you time to adapt your spending and debt repayment behavior accordingly. 
    • If you are finding it difficult to make payments on your credit accounts it is always best to approach your lender before the due date and ask for an extension. 
    • Try to keep your balances as low as possible and do not let your credit utilization exceed 25% - 30%. 
    • Only use personal loans to refinance debt with a higher APR. 


    The FICO 10T scoring model will penalize borrowers who pay late, have high outstanding balances, and do not pay down their revolving credit.

    Personal loans may also knock a few points off your score from the end of 2020 onward but are still useful in refinancing existing high APR debts.

    By keeping your balances low and paying your installments on time, you will be able to maximize your credit score as FICO 10T becomes the new normal for scoring.