FICO Score Update: Here’s What You Need to Know

July 11, 2020

Your credit score plays a role in nearly every financial move you make. Having a great credit score can save you hundreds (or thousands) of dollars a year through lower interest rates on your credit card accounts, personal loans, moving loans, car loans, or mortgage. Living with a bad credit score can mean higher interest rates, and, sometimes, make it difficult to get approved for the financing you need.

Credit scoring models have evolved over time, creating a more accurate picture of your financial health with every new update. Recently, a new FICO score update, FICO 10, includes some of the biggest changes the popular credit scoring model has seen in years. Here’s everything you need to know about the latest FICO score update and what it could mean for you.

What Is the FICO Score?

Named for the Fair Isaac Corporation, FICO is the credit score most commonly used by lenders to estimate credit risk. Scores range from 300-800 or 250-900, depending on the scoring model.

To determine your score, FICO pulls information from the three main credit bureaus (Experian, TransUnion, and Equifax) and uses five key factors to calculate your score:

  • Payment history
  • Amount of debt owed
  • Length of credit history
  • New credit applications
  • Mix of credit types

Since FICO pulls information from all three bureaus, you’ll have three different credit scores, which may vary somewhat, as not all bureaus report information in the same way. Your credit score will also change frequently, sometimes even day-by-day as new information becomes available in your credit reports.

What Is Different About the New FICO Score?

The FICO score update, FICO 10, is largely the credit scoring model we’re used to seeing, but with some important differences. Your credit score is still determined by those five key factors above and you’ll still be graded on the same three-digit scale. However, the new model has two key changes.

First, FICO 10 changes the weight of factors in your credit file. Late payments and credit utilization may have a greater impact on your score than in the past. However, FICO 10 is similar to previous FICO versions—lenders who use the base FICO 10 model see a snapshot of your credit profile based on those key factors.

The most important difference, though, is the FICO 10T update and its “trending” data. Instead of providing a simple snapshot of your credit reports, 10T shows lenders how your financial health is evolving over time. FICO 10T looks at your credit balances, payments you’ve made, and credit debt over the past 30 months, versus simply giving you a score based on a monthly reported balance.

What Does the FICO Score Update Mean for You?

FICO 10T adapted trending data as a way for lenders to determine if you’re moving toward financial health, away from it, or largely staying the same. By looking at a full 30 months of data, in theory, lenders can better predict recent trends to see how you may repay in the future. Or, as NerdWallet explains, “If you think of a traditional FICO as a snapshot, the 10T would be more like a short video.”

The change in the way data is presented also means some actions may impact you score more under the new model. If you’re steadily paying down your debt balances (or you pay in full every month) your FICO score may improve. However, taking on a lot of debt or letting large debts revolve over several months may hurt your credit score more under the FICO score update. It will also be even more important to pay your bills on time each month and keep your accounts current. Under FICO 10, missed payments will have a bigger impact on your score.

If you’re planning to apply for new credit or take out a loan in the near future, keep in mind that not all lenders will use FICO 10 or FICO 10T. Adopting an updated credit scoring model can be costly and time consuming for lenders. Since FICO keeps older versions active, many simply opt to stay put. According to NerdWallet, FICO 8 is still most commonly used for non-mortgage lending.

What About Other Types of Credit Scores?

FICO isn’t the only credit scoring model out there. All three credit bureaus have created proprietary scoring models, and they also partnered to create one model together. Here’s a quick rundown:


All three major credit bureaus got together to create the VantageScore scoring model in 2006. Like FICO scores, VantageScores can vary across the three credit agencies, and use similar data to FICO to determine your score. The latest model also uses the same scoring range.

However, VantageScore differs from FICO in a few key ways. For one, while your FICO credit score may vary depending on which credit bureau the score is requested from, you only have one VantageScore. Where FICO scores consider your credit card balances, your VantageScore also weighs whether you pay that balance off in full each month. Collection accounts are also handled differently. The VantageScore essentially ignores paid collections when factoring your credit score.

TransUnion TransRisk Account Credit Score

Similar to Experian PLUS, the proprietary TransUnion score ranges from 300 to 850 and relys on the same factors as FICO when determining your credit score.

However, TransUnion TransRisk Account, also known as TransUnion Account Management Score, was developed to help lenders identify existing customers who may be eligible for extended credit lines or new products. It is unlikely that you’d receive one of these scores when applying for a new account with a new lender.

What’s My Credit Score?

While you can get to read your credit report for free once a year, you must pay an additional charge to see your credit score. (Due to COVID-10, through April 2021, you can get a free copy of your credit reports once per week.) If you decide to pay a fee for a score, make sure to order the one that’s used by the lender you want to borrow from. Even when the score ranges are similar, the scores themselves are not comparable. A 760 FICO score is not the same as a 760 Vantage Score or a 760 PLUS score.

The Bottom Line

Remember that whatever credit score a lender uses to make lending decisions, similar factors determine whether you have good credit, bad credit, or great credit. By borrowing only what you need and paying your bills on time, you’re on your way to a great credit score, no matter the model and you can use a few credit score hacks to give you a boost.

Though personal loans have a different effect on your FICO score than they did previously, you may still benefit from using a low-interest personal loan to consolidate high interest rate credit card and other debt.

Interested in learning more? Check out these related blog posts:

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