HUGE News about Credit!

On October 24th, the mortgage industry announced that they are changing credit report and credit scoring models. This is HUGE!

For the past 20 years, the mortgage industry has stuck with the old, tired FICO 2, 4, and 5 models. No updates or upgrades to any of the new models over the years. They didn’t want to spend the money to convert, and they said the old models were working just fine.

Except that as new data came in, they weren’t working so well for everybody. Credit scoring was called unfair and unequal for everyone.

In 2018, Congress told them to get with it and choose a credit model update already! This launched their big multi-year investigation and testing project.

Now, FINALLY, they have agreed that there are two new credit models that are more accurate and more fair:
FICO 10T and Vantage 4.0

FICO 10T is different than FICO 9 or FICO 10. The “T” stands for Trended Data. It uses Artificial Intelligence to look at how you are managing credit, not simply at what you’ve done. It is like a video of your credit activity rather than a snapshot.

For example, Trended Data sees more than if you paid on time. It also sees if you paid the minimum balance due or if you paid the balance in full. You get more points for paying the balance in full each month — something I have been advocating for a long time.

Another example is that if you consolidate a credit card with a personal loan in order to avoid the higher interest rate on the credit card, the Trended Data will see what you’re doing and dock your score a little. Why? Because it believes you over-charged on your credit card as evidenced by your need to consolidate the two.


With FICO 10T and Vantage 4.0, your rent payments, utilities, and telecom payments can be included on your credit report and you will get credit score points for paying on time. Yay! This helps groups of people, including young adults and minorities, who have not had the advantage of buying a home and having a mortgage payment on their report. It helps people with “thin credit files” to beef up the data for earning a good score.

NEW! Two Scores Required, Not Three

The mortgage industry has used a tri-merge credit report with Equifax, Experian, and TransUnion all on one report, showing three credit scores. They then use the middle score of the three, throwing out the lowest score. If a person has only two scores showing, the bottom score is used. But that has changed.

Now, they are required to use only two scores: one from FICO 10T and one from Vantage 4.0. These new versions have proven to be more accurate, according to the vast amount testing done over the past few years.

When Does This Start?

Starting now, mortgage lenders and banks can use FICO 10T and Vantage 4.0 for their mortgage applications. However, not all banks and lenders are going to transition immediately.

You need to ask your loan officer these questions if the new scoring is important to your credit scenario:
1) Are you using the new FICO 10T?
2) Are you using Vantage 4.0?
3) Are you pulling a tri-merge or bi-merge credit report?

If your loan officer or real estate agent has not yet seen this news please pass on this blog post t them. Please share on social media so the word gets out. Here is the official announcement. Thank you!

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2 thoughts on “HUGE News about Credit!

  1. Hi Carolyn and thank you for this article. Will the utilities and telecom automatically be reported or is this something we have to initialize ourselves? And, do they go back in time on your file or they start current day and moving forward?

    1. A consumer cannot report it to the credit bureaus. The utility company, the telecom company, and the landlord must do it. This is brand new, so I don’t know how many or which companies are doing this immediately. It is expected to take some time for it to be implemented on a widescale basis. You would need to call your own companies and ask them about their reporting timeline and dates.
      I saw no information about the reporting being retroactive, and that is an excellent question. If I can find out, I’ll let everyone know.

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