Trended Credit Data

In this month's Economic Update, Senior Economist Dawit Kebede shows how trended data impacts lending decisions and consumer credit scores.

Trended credit data is becoming more popular with lenders and is likely to impact credit scores in the future. While traditional scores and reports provide a snapshot of a consumer's creditworthiness, trended data offers a wider view of the consumer's credit habits. See how lenders are using this data and what it means for consumers like your members.

What is Trended Credit Data?

Traditional credit reports are a snapshot in time, giving a view of consumer credit usage. Trended data looks at 24 months of consumer debt, payment behavior, and credit utilization, showing how consumers manage their debt over time.

How do lenders use this?

Using this dynamic picture, lenders can better assess credit risks with consumers. Fannie Mae has been using this in their automated underwriting system since 2016. Freddie Mac requires trended data on credit reports for Loan Product Advisor submissions.

Vantage 4.0 and FICO Score 10T both use trended data in their credit score calculations. Vantage 4.0 also includes data on rental and utility payments in this scoring.

What the expanded view means for consumers

Additional use of trended data can change consumer credits scores, as much as one-third of consumers will change score tiers with the adoption of Vantage 4.0. About half would move up a tier, while the half would move down a tier.

This will be based on their credit use, whether they carry revolving debt or are paying off the majority monthly. The impact of additional payments for utilities or rent would also factor in.

How credit unions can help members

Talk with your members about how credit works and how certain behaviors can impact their scores. If you are interested in how your credit union can do more to help your members improve their financial well-being, the Financial Counseling Certification program is a great place to start.

Watch the full video for more details

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