Fact Checked

The new FICO scoring model: How it may affect you

Woman sitting at her desk, reading on her laptop about the new FICO scoring models Image: Woman sitting at her desk, reading on her laptop about the new FICO scoring models

Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors' opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted. Read our Editorial Guidelines to learn more about our team.
Advertiser Disclosure

We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

Fair Isaac Corp., creator of the FICO® scores commonly used by U.S. lenders, will be launching two new versions of its credit scores this summer.

The FICO® Score 10 and FICO® Score 10 T are designed to help lenders better reduce risk and loan defaults. FICO will include trended credit bureau data in its 10 T score to provide a more historical view of credit report data, such as how someone’s debt levels have changed over the past 24-plus months. FICO will also flag certain consumers who apply for personal loans, which are considered riskier than other types of loans because they generally aren’t secured by collateral.

What could this mean for your credit scores? It depends. Under the new FICO Score 10 T, your score could be lower if you shift to carrying balances on your accounts, since the new model tracks your debt levels over time.

Keep in mind that not everyone uses the same credit-scoring models. For example, when you view your credit scores on Credit Karma, you’re seeing your VantageScore® 3.0 scores from TransUnion and Equifax. This means that the new FICO scoring model won’t affect the credit scores you see on Credit Karma.

It’s too early to tell whether the FICO Score 10 and FICO Score 10 T will be widely adopted since lenders are generally able to choose which version of FICO score or VantageScore they use.

What can you do? It’s important to work on building your credit, no matter what score a lender is using. Both the FICO and VantageScore models place importance on making on-time payments and keeping credit utilization low. You typically also want to limit the number of credit accounts you open in a short period of time, especially if you don’t have a long credit history.