DETROIT – The company behind the popular FICO credit score is going to start incorporating consumers’ debt levels into their score.
Credit scores are key to getting a loan for a car, a house or getting a credit card. The change means the more debt a consumer has, the more harshly they’ll be penalized for making a late payment.
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Fair Isaac Corp., the company behind the score, announced the launch of its FICO Score 10 Suite on Thursday.
FICO estimates that about 110 million consumers will see a change of less than 20 points to their score under the new model. Roughly 80 million consumers will see a change in score of 20 points or more in either direction, upward or downward, according to FICO.
The scoring model will likely create a wider gap between those who are considered good credit risks and those who are not, according to CNBC. Those who have good credit and continue to work down their loans could see higher scores. Those who score below 600 will likely see bigger dips in their scores.