Your credit-risk score soon may drop or rise even if your ­finances remain the same. That’s because FICO 10—a new version of the widely used FICO credit-scoring system—will be available to lenders from all three major credit-reporting agencies by the end of 2020. Fair Isaac, the company behind the FICO credit score, estimates that the new scoring system will produce a swing of 20 or more points up or down for 80 million Americans. That could be enough to affect the interest rate you pay when you borrow…and affect whether you qualify for certain credit cards. Two key changes…

New 24-month credit card window. Under the old system, FICO scores are based on a “snapshot” of your credit card usage, reflecting your most recent month’s statement balance when someone checks your score. The new system can consider your balance and payment history over the past 24 months. That could hurt your score if you only recently paid down long-standing card debt or have carried over balances from month to month. Or it could help your score if you usually keep outstanding balances low but have a temporary spike in outstanding debt.

Larger penalties for missteps. Under the new system, your score could be hurt more than in the past if you miss credit card payments…use a large percentage of your available credit…or your credit card debt climbs. FICO 10 also increases the scoring penalty if you use a personal loan to consolidate credit card debt and then quickly run up credit card balances again. 

What to do: It’s no longer sufficient to check your credit reports for potential problems and/or pay down debt only a month or two before applying for a loan or job. The new 24-month lookback means that you should monitor credit reports more regularly and keep card balances as low as possible. And it’s even more important than before to pay credit card bills on time and, if possible, in full.