What's Happening?
Credit scoring models are evolving in 2026, with lenders increasingly adopting systems like FICO Score 10T, which utilize trended data and alternative payment information to assess borrower creditworthiness. This shift allows lenders to evaluate up to 24
months of payment and balance history, providing a more comprehensive view of consumer credit behavior. The FICO Score 10T model incorporates rental payment history and other alternative data sources such as utility bills and telecom payments. This approach is particularly beneficial for borrowers with limited credit histories, offering them a path to build credit without relying solely on traditional credit cards or loans. The Consumer Financial Protection Bureau has issued guidance on the use of alternative data in underwriting decisions, and the trend is gaining traction across the lending industry.
Why It's Important?
The adoption of new credit scoring models that include alternative data sources is significant for both lenders and consumers. For lenders, these models can lead to more accurate risk assessments and potentially higher approval rates without increasing risk. For consumers, especially those with limited or thin credit histories, the inclusion of alternative data provides an opportunity to build a credit profile based on a broader range of financial behaviors. This can lead to increased access to credit and better financial opportunities. The market for alternative credit scoring is projected to grow significantly, indicating a shift in how creditworthiness is evaluated in the financial industry.
What's Next?
As more lenders adopt these new credit scoring models, consumers may see changes in their credit scores even if their financial habits remain unchanged. This is because different lenders may use different scoring models. The integration of alternative data into credit decisions is expected to continue expanding, with more lenders likely to adopt these models in the coming years. Consumers are advised to maintain low credit utilization throughout the month, as trended data rewards consistent balance management over time.
