FICO® has announced its newest credit score models – the FICO Score 10 and FICO Score 10T – with a focus on consumer personal loans and credit trends.
With the new FICO Score, lenders will be rewarded for paying their lenders on time and have more precision and predictability when making lending decisions, according to Jim Wehmann, FICO’s executive vice president for Scores. The new scores will be released this summer, he said.
“We continuously innovate using the latest, most robust data, while maintaining consistency with previous models to ensure backward compatibility and minimize operational changes required to adopt a new score,” he said. “Many lenders want to leverage the most comprehensive data possible to make precise lending decisions. By offering a score that taps further into trended data, we’re able to give lenders greater flexibility and predictive power, as well as ease of integration.”
What Do the New FICO Scores Mean for Consumers?
According to Wehmann, FICO Score changes can affect consumers differently.
Among the most significant changes are:
Personal loans will be weighed more heavily. Borrowers who consolidate their debt with a personal loan and then obtain additional debt might see their credit score drop.
Consumer credit trends are taken into account in the new scores, so paying off debt or accruing more debt during the past 24 months is considered.
Credit utilization is also taken into account in the new scores. The lower the ratio of credit card debt to total credit available, the better a consumer’s credit score. Therefore, paying off your credit card debt in a timely manner is essential.
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