Credit scoring is undergoing major changes that will affect how lenders assess borrowers and how consumers access credit. Updates to scoring models, the types of data included in credit reports, and regulatory reforms are reshaping the future of creditworthiness.
In short, the biggest changes on the horizon include:
- The Federal Housing Finance Agency (FHFA) phasing out older FICO models in favor of FICO 10T and VantageScore 4.0.
- The inclusion of Buy Now, Pay Later (BNPL) and trended data in some credit scores.
- The Consumer Financial Protection Bureau (CFPB) removing certain medical debts from credit reports.
At the core of these updates is the goal of giving lenders a more accurate and complete picture of consumer behavior—leading to potentially higher credit scores and better access to credit for millions of people.
Key Questions Mortgage Professionals Are Asking
These changes raise several pressing questions, especially within the mortgage industry:
- How do the new models differ from the classic FICO?
- What impact will these updates have on mortgage eligibility?
- When will the new rules take effect?
New Scoring Models: FICO 10T and VantageScore 4.0
The FHFA is moving away from legacy FICO models and requiring mortgage lenders to adopt FICO 10T and VantageScore 4.0. Both models are designed to provide more sophisticated and reliable credit evaluations.
Trended Data
Unlike older models that rely on a snapshot of current balances, newer systems use trended data, which reflects a borrower’s payment habits over time. This gives lenders a clearer sense of long-term financial behavior.
BNPL Loan Data
As BNPL services become mainstream, FICO will begin incorporating BNPL payment data into certain credit scores, providing a more realistic assessment of consumer borrowing patterns.
What’s Changing in Credit Reports
Medical Debt Removal
To improve accuracy and fairness, the CFPB will remove many medical debts from credit reports—including all repaid debts and those under $500. This shift is expected to lift scores for many consumers.
Utility and Telecom Data
Some models, including FICO 10T and VantageScore 4.0, will also factor in utility and telecom payments—provided this information improves, rather than harms, a consumer’s profile.
Impact on Consumers
Higher Scores
With medical debt minimized and more positive payment data included, many consumers are likely to see their credit scores rise.
Easier Access to Mortgages
The updated models will broaden mortgage eligibility, potentially allowing more people to qualify and secure loans at lower interest rates.
Smarter Risk Assessment
The combination of trended data, BNPL records, and alternative sources will enable lenders to build more nuanced profiles of consumer financial behavior.
Trends Shaping Credit Scoring Through 2026
Credit scoring is evolving rapidly. Traditional systems fail to capture the financial lives of nearly 1.4 billion unbanked people worldwide (World Bank). To bridge this gap, lenders are adopting alternative data and digital tools. Key trends to watch include:
1. Growth of Artificial Intelligence (AI)
The global AI market in fintech—valued at $10.3 billion in 2024—is projected to reach $40.2 billion by 2030. In the next 6–18 months, expect AI to drive:
- Greater transparency and ethical frameworks.
- Predictive modeling for risk assessment.
- Real-time lending decisions.
2. Use of Alternative Data
Studies show that digital footprints can predict loan defaults as accurately as traditional credit scores. Combining both data types improves accuracy even further. By 2026, lack of bureau data will be far less of a barrier to borrowing.
3. Expanding Financial Inclusion
In developing countries especially, traditional banking access remains limited. Alternative scoring—powered by internet and mobile data—can significantly expand financial inclusion by enabling underserved populations to build credit.
4. Regulatory Shifts
As new data sources emerge, compliance rules are tightening. Lenders must adhere to U.S. laws like the FCRA, ECOA, and GLBA, alongside evolving EU rules (CCD2, AI Act) and the U.S. CFPB’s open banking rule. By 2026, these regulations will promote fairer, more transparent credit assessments.
Final Thoughts
Credit scoring is entering a transformative era. By 2026, lenders will rely on richer datasets, AI-driven models, and fairer regulations to expand credit access while managing risk more effectively.
For consumers, this could mean higher scores, easier access to mortgages, and more equitable lending decisions. For lenders, understanding these trends will be key to staying competitive in an evolving marketplace.
