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FICO Changes Coming And How They Affect You

There’s a big buzz going on right now about the coming changes for FICO scoring. FICO scoring, in case you don’t know, is the score that creditors use to gauge your “credit-worthiness”.  

You might already be asking, "so, what does it all mean, Basel?"
 
As you might expect from the name, "Zero Debt Coach", I hate debt.
 
I hate credit scores and everything associated with them. I see FAR too many people put too much unnecessary importance on this much to their financial detriment and I'll be talking more and more about this in future content.
 
As a result of this hatred for the system (and its inherent destructiveness), I coach my students away from using debt, credit and from ever having to worry about their FICO score again.
 
Keep in mind that your FICO score is just and "I love debt" score that you've likely paid thousands-to-tens-of-thousands to achieve. I don't want you to do that anymore!
 
But that’s a discussion for later. Let’s dive into what the FICO changes are for 2020.
 
 

What Is FICO, Anyway?

FICO = Fair Isaac Corp. It’s basically a software algorithm that looks at certain data points in our financial interactions like:
 
1. How much debt we have
2. Payment history
3. Delinquencies
4. And other factors that appear to be somewhat opaque (i.e. not fully disclosed by FICO)
 
This data is used to assign you a "credit score" or a score that denotes your "worthiness" to be enslaved to debt. The higher your score, the more "worth" you are.
 
Do you see why I hate this so much?
 
Also, it's important to understand that FICO upgrades their software every few years, thereby changing the criteria ever so slightly and tracking ever more of your financial behaviors.
 
Here are the last few incarnations of the protocol as an example:
 
- FICO 8 - 2009
- FICO 9 - 2014
- New FICO software coming out later in 2020 - FICO “10" & “10t” - penalties for missed payments, rising debt, certain personal loan usage. “Helps” 680 and above, “hurts” 600 and below.
 
Again, each new update introduces new options for the users of FICO's algorithm (i.e. Trans Union, Experian and Equifax) to be able to parse out different data points, essentially to use against you.
 
Remember, this game is all about risk mitigation and harvesting your dollars for them and staying in a never-ending cycle of debt slavery for you.