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The Way FICO Calculates Credit Scores Is Changing. Here’s What That Means For You.

FICO credit score report.
FICO credit score report.
Courtney Keating/iStockphoto

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FICO provides one of the most used credit scores used by lenders, and it recently announced that it’ll be changing its scoring algorithm. 

While FICO isn’t totally transparent about what goes into its credit-calculating secret sauce, we know that the new method will mean even lower scores for consumers with increasing amounts of debt and a shaky history of payments. For high-scoring consumers with a good track record of loan management, scores will likely get higher. 

Why the change? What will be its effects? We take a closer look.


Megan Leonhardt, senior money reporter with CNBC’s ‘Make It,’ a section geared at young professionals; she tweets @Megan_Leonhardt