Credit

What is credit scoring?

A statistical method of quantifying a borrower’s likelihood of repaying debt, typically expressed as a numerical score. Traditional credit scores (FICO, VantageScore) are based on payment history, credit utilization, length of credit history, credit mix, and new credit inquiries. Alternative credit scoring models incorporate non-traditional data such as rent payments, utility bills, and banking behavior to extend credit access to underserved populations.

How it works

Example: A credit union uses an alternative scoring model that factors in a member’s consistent rent payments and utility bill history, enabling approval for a member whose traditional FICO score would have resulted in a decline.