FICO 10 and FICO 10T: Definition and How They Work

What Are FICO 10 and FICO 10T?

FICO 10 and FICO 10T, collectively known as the FICO Score 10 Suite, are the latest credit scoring models from FICO (formerly the Fair Isaac Corporation). According to the company, FICO 10 and FICO 10T are designed to outperform all previous versions of FICO scores in helping lenders evaluate credit risk.

What You Need to Know

  • The FICO Score 10 Suite is the newest FICO credit scoring model, consisting of two scores: FICO 10 and FICO 10T. 
  • The FICO 10T credit score includes trended data, which looks at individual consumers’ payment and debt history for the previous 24-plus months to help calculate their credit scores. 
  • According to FICO, the new model is the most comprehensive scoring model created by the company to date. 
  • FICO 10 and FICO 10T don’t replace other credit scoring models, such as FICO 2, 4, 5, 8, or 9, which lenders can still use in making credit approval decisions.

Understanding FICO 10 and FICO 10T

The FICO Score 10 Suite is designed to be the most predictive and comprehensive credit score model developed by FICO to date, allowing lenders to better measure risk for credit decision-making.

A key feature of FICO 10T is the use of trended credit bureau data on individual borrowers, or data on their credit management in the past 24 months, to calculate their credit scores, providing a more complete picture of their potential credit risk.

According to FICO, the new credit scoring models could help lenders reduce default rates on credit cards and auto loans by 10% and 9% respectively, compared with FICO 9. For mortgage loans, FICO estimates that the FICO Score 10 Suite could reduce defaults by 17%.

FICO 10T represents a new take on credit scoring with the use of trended data, which looks at how consumers have managed their financial accounts over the previous 24 months or longer, including things such as whether they carried a balance from month to month or consolidated their debts during that time.

This is meant to give lenders more insight into how someone handles their finances. FICO 10 and 10T scores can be used by lenders to assess credit risk when a person applies for credit cards, car loans, personal loans, and mortgages. 

FICO 10 and FICO 10T won’t replace earlier versions of the FICO credit score, however, and lenders can continue to use those older models. Many lenders still rely on the FICO 8 credit scoring model, for instance, for credit approvals with products such as credit cards and personal loans. For mortgage loans, lenders may use different versions, such as FICO 2, FICO 4, or FICO 5. Car loan issuers can use the same options: FICO 2, FICO 4, FICO 5, or FICO 8.

When you apply for a mortgage, lenders can pull your FICO credit scores from each of the three major credit bureaus, TransUnion, Experian, and Equifax. Typically they only use the average or middle score of the three for making credit decisions. 

How FICO Credit Scores Work

FICO credit scores are meant to help lenders, such as banks and credit card issuers, predict how much of a risk you are likely to be, based on your financial history. Specifically, FICO scores take five major factors into account:

  • Payment history (35%)
  • Credit utilization (30%)
  • Credit age (15%)
  • Credit mix (10%)
  • New credit (10%) 

Because payment history carries the most weight, paying your bills on time each month can help you establish a positive credit history and potentially improve your FICO scores. Paying late, on the other hand, can damage FICO scores. The second most important factor, credit utilization, refers to how much of your available credit you are using at any given time.

It’s worth noting that delinquencies may hurt credit scores even more under the FICO 10 and FICO 10T models. So if you miss payments, you could be more likely to see a significant drop in your credit score than you would under previous FICO scoring models.

Credit utilization could also carry more weight with the new scores. Like other FICO scoring models, the updated FICO 10 models should be more favorable toward consumers who maintain a lower credit utilization versus a higher one. Having personal loans may also count against you more with FICO 10 and FICO 10T than it would with older FICO models.

How to Check Your FICO Credit Scores

So far, FICO has made no announcement about when (or whether) individual consumers will have access to their FICO 10 and FICO 10T scores. For now, you can check your FICO 8 and FICO 9 credit scores by purchasing them through FICO.

Alternatively, you may be able to access either of those scores free of charge. Many banks and credit card companies offer free FICO credit score access to their customers. 

Consider setting up banking alerts or automating your bill payments to avoid paying late.

How to Improve Your FICO 10 and FICO 10T Credit Scores

If you had a low FICO score before FICO 10 and FICO 10T were introduced, you are unlikely to see any improvement under the new models. Improving your credit scores begins with knowing what works in your favor and what may hurt your score. With all FICO credit scores, taking the following steps can help you improve your credit: 

  • Pay bills on time each month
  • Keep credit card balances as low as possible
  • Hold off on applying for new credit accounts unless it’s absolutely necessary
  • Keep older credit accounts open
  • Use a mix of different credit types

Out of those five, payment history and credit utilization will have the most impact on your FICO 10 and FICO 10T credit scores. Staying on top of due dates and keeping credit card balances low could be most helpful in boosting your scores.

As FICO 10T scores take trended data into account, time may be the best tool you have for building good credit. The longer your history of paying bills in a timely manner and maintaining low debt balances, the better.

Which Mortgage Lenders Use FICO 10T?

Freddie Mac and Fannie Mae are among the mortgage lenders that use FICO 10T. The Federal Housing Finance Agency announced approval of the credit score model in October 2022. At the time, also approved the use of the VantageScore 4.0 credit score model.

Will Experian Boost Work With FICO 10 and FICO 10T?

Experian Boost will continue to work with FICO 10 and FICO 10T scores. Experian boost allows borrowers to include payments to non-creditors such as utilities companies or streaming services in their credit score.

What Is the Goal of a FICO 10T Credit Scoring Model?

The FICO 10T credit scoring model is designed to give lenders a more precise picture of your creditworthiness. It provides trended data of how you've managed your credit over the past 24 months.

The Bottom Line

Your FICO 10 and FICO 10T credit scores provide valuable information about your credit history to lenders. Understanding how this suite of credit scores work in comparison to other scores, and know when it is commonly used, can help you make decisions about how to improve it.

Article Sources
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  7. "Choose a Credit Report: One-Time Report." Footnote 1

  8. Federal Housing Finance Agency. "FHFA Announces Validation of FICO 10T."

  9. Experian. "What You Need to Know About the FICO 10 Score Changes."

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