What Data Goes into Consumer's Credit Histories?

Did you know that your credit score isn’t just about your credit cards and loans? Today, credit scoring models are evolving, incorporating a broader range of data to provide a more accurate picture of your financial health.

Shubhi Jain

8/27/20243 min read

Credit history and credit scores are traditionally based on data related to an individual’s financial behaviors, but there's a growing trend to incorporate non-traditional data as well.

Here’s a breakdown of the types of data that can be incorporated into credit history and credit scores:

1. Traditional Data

This is the most commonly used data for calculating credit scores and includes:

  • Credit Accounts (Trade Lines):

    • Credit Cards: Information about credit card accounts, including balances, payment history, credit limits, and the age of the account.

    • Loans: Details about mortgages, auto loans, personal loans, student loans, etc., including payment history, remaining balance, and original loan amount.

  • Payment History:

    • On-time, late, or missed payments for all credit accounts. Payment history is typically the most important factor in credit scoring.

  • Credit Utilization:

    • The ratio of current credit card balances to total available credit limits. A lower credit utilization ratio generally positively impacts credit scores.

  • Length of Credit History:

    • The age of your oldest credit account, the age of your newest credit account, and the average age of all your accounts.

  • Types of Credit:

    • The variety of credit accounts (e.g., revolving credit like credit cards, installment loans like mortgages). A mix of credit types can benefit the score.

  • Recent Credit Inquiries:

    • Hard inquiries, which occur when you apply for new credit, are recorded on your credit report and can temporarily lower your score.

2. Public Records and Collections

  • Bankruptcies:

    • Information about any bankruptcies filed, which can remain on a credit report for up to 10 years.

  • Liens and Judgments:

    • Previously, tax liens and civil judgments could impact credit scores, but they are no longer routinely included in credit reports as of 2018 due to changes in credit reporting practices.

  • Collections Accounts:

    • Accounts that have been sent to collections, indicating severe delinquency in payments, can negatively impact credit scores.

3. Non-Traditional Data

Non-traditional data refers to types of financial information that are not typically included in credit reports but can provide a fuller picture of an individual’s creditworthiness:

  • Rental Payments:

    • Regular, on-time rent payments can be reported to credit bureaus and included in credit scores, especially through alternative credit scoring models like FICO Score 9 or VantageScore.

  • Utility Payments:

    • Payments for services like electricity, water, gas, and even cell phone bills. Regular, timely payments can be reported to credit bureaus, particularly through services that work to include this data.

  • Telecommunications Payments:

    • Payments for phone, internet, and cable services can also be reported and potentially included in credit scores.

  • Subscription Payments:

    • Some alternative credit scoring models may consider regular payments for subscription services, such as streaming platforms, as part of your credit history.

  • Bank Account Information:

    • Data from checking and savings accounts, such as the history of overdrafts or consistent direct deposits, can be used in some alternative credit scoring models.

  • Employment and Income Information:

    • Although not traditionally included in credit reports, some alternative credit models might consider employment history and income levels to assess creditworthiness, especially in specific lending contexts like mortgages.

4. Alternative Credit Scoring Models

  • FICO Score XD and UltraFICO:

    • These scoring models consider non-traditional data like telecom and utility payments or savings behavior to assess the creditworthiness of individuals with limited credit history.

  • VantageScore:

    • VantageScore can include rent, utility, and telecom payments if they are reported to the credit bureaus, and it is designed to score more people with limited credit histories.

Implications

Incorporating non-traditional data into credit history and credit scores can be particularly beneficial for individuals with thin or no credit files, such as younger people, recent immigrants, or those who primarily use cash. It allows these individuals to build or improve their credit scores based on a broader range of financial behaviors, potentially opening up access to credit products that were previously unavailable to them.

However, the inclusion of non-traditional data depends on whether it is reported to the major credit bureaus (Equifax, Experian, and TransUnion) and the specific credit scoring model used by a lender. Not all lenders or credit scoring models currently consider non-traditional data, though this is changing as the industry evolves.

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