FICO aims to measure how you’ll fare in the economic downturn

The firm’s new Resilience Index takes a closer look at key credit scoring factors. Here's what that could mean for your credit approval odds


FICO says more “resilient” consumers tend to have lower revolving balances, fewer recent credit inquiries, fewer active accounts and more experience managing credit. Using those criteria, it’s developed a new index to gauge how consumers fare in an economic crisis.

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The FICO Resilience Index recently launched as a companion to the traditional FICO credit score.

As FICO describes it, “The FICO Resilience Index is not designed to measure consumers’ current credit risk, but rather to predict consumers’ resilience in the event of an economic downturn.”

It’s based on much of the same information as a “regular” FICO score, with a few twists.

The “normal” FICO formula is 35% payment history, 30% amounts owed, 15% length of credit history, 10% credit mix and 10% new credit. While the exact FICO Resilience Index percentages have not been publicized, we know it’s less focused on payment history and more about amounts owed (particularly your credit utilization ratio, which is credit you’re using divided by your credit limit), the length of your credit history and how many active accounts and recent inquiries you have on your credit reports.

See related: How to build good credit

How it works

FICO says more resilient consumers tend to have lower revolving balances, fewer recent credit inquiries, fewer active accounts and more experience managing credit. All of this makes sense, and it’s not a radical departure from what FICO has been doing for years, but it is useful as a tiebreaker of sorts.

That’s particularly true these days, as lenders grapple with the confusion caused by the COVID-19 pandemic and a job market that went from the lowest unemployment rate in 50 years in February to the highest in 90 years in April.

The best use for the FICO Resilience Index is around the edges. If you’re on the border of being approved or denied for a loan or line of credit, the FICO Resilience Index could tip the scale one way or the other.

The same goes for credit limit increases and decreases. Let’s say two borrowers have a 680 credit score, which might put them on the margin of being approved or denied for a credit card. If one of them has a significantly lower credit utilization ratio, fewer recent inquiries, fewer active accounts or a longer credit history, they’re probably the one that will get approved.

See related: Does being denied a credit card hurt your credit score?

Your action plan

Out of all these factors, the easiest to control – and the easiest to adjust quickly – is your credit utilization. That’s true for the Resilience Index and your “regular” credit score. You could have a high utilization ratio even if you pay your credit cards in full each month, because utilization is usually measured as of your statement date.

If you make $4,000 in charges throughout the month and you have a $5,000 credit limit, your 80% credit utilization ratio is high, even if you pay the entire amount before interest accrues. I suggest submitting an extra payment to knock the utilization ratio down before the statement even generates.

Personally, I try to pay my credit cards on pay day, every two weeks. It keeps my utilization ratio down and helps me stay on budget. Ideally, your ratio will be below 30%, and many of the people with the best credit scores have utilization ratios below 10%.

FICO retroactively stress-tested the Resilience Index with data from the financial crisis. They found that within most credit score bands (for instance, 640-659, 660-679, 680-699, etc.), the least resilient 20% of borrowers in 2007 were about twice as likely to fall 90 or more days behind on their bills by 2009 than the most resilient 20%.

That’s notable because these consumers ranked very similarly on the traditional FICO scale. Lenders can use this additional information to better manage their portfolios, including approvals or denials and credit line increases or decreases.

See related: Which credit bureaus do credit card issuers use to check your credit?

Putting it into practice

For lenders, the barriers to entry are low, because FICO is providing the index to all of its customers at no additional charge. And it’s intended as a supplement, not a replacement for what they’re already comfortable with.

The timing is ideal. For example, the Fed’s April 2020 Senior Loan Officer Survey found: “Significant net shares of banks tightened standards on credit card loans and other consumer loans [in Q1 2020]. Significant net fractions of banks also tightened important terms on credit card loans, including credit limits, minimum credit scores required and the extent to which loans are granted to customers who do not meet credit scoring thresholds.”

Instead of a blunt instrument, the FICO Resilience Index will enable lenders to be more surgical about these adjustments, which should work out better for lenders and borrowers.

Have a question about credit cards? E-mail me at and I’d be happy to help.

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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