How Does Trended Credit Data Impact Credit Scores?

Quick Answer

Creditors and some credit scoring models are using trended credit data to better understand your creditworthiness and make decisions. These trends can include behaviors, changes and averages derived from up to 24 months’ of account history in your credit reports.

Man checking his credit score on a laptop holding his credit card

Credit scores provide creditors with a snapshot of your credit risk at a given moment. But some newer scoring models now consider trends in your credit history when calculating your score.

Two models in particular, the FICO® Score 10 T and VantageScore® 4.0 credit scores, incorporate trended data and are important because many mortgage lenders will use these scores in the coming years. Understanding how and what types of trends could impact your credit may be important if you want to get a mortgage or other type of credit account with favorable terms.

What Is Trended Data?

Trended data includes up to 24 months of information on each of the credit accounts in your credit reports. These trends can help creditors understand how consumers use credit over time, which can be important when determining how much to lend and what interest rates to charge.

For example, your credit utilization ratio is an important credit scoring factor that compares your credit limits and current balances on revolving credit accounts, such as credit cards. Most credit scores only look at your most recently reported balances and limits to calculate your utilization ratio. By looking at trends in your payments and utilization, creditors can better understand how you use credit cards and whether your utilization ratio is rising or falling over time.

Credit scoring models and creditors can look for different trends that might help them predict risk, such as:

  • Your combined credit card balances over time
  • Your average utilization ratio over a specific period
  • Whether you regularly pay more or less than the scheduled payment amount on installment loans
  • Whether you're using balance transfers or debt consolidation loans to move balances between accounts
  • How much you pay over the minimum payment
  • How often or how many times you go over your card's credit limit
  • The number of credit limit increases or decreases you receive

Ultimately, credit score developers and creditors will try to find the trended data points that best help them predict whether a borrower will fall behind on payments.

How Do Creditors Use Trended Data?

The VantageScore 4.0 and FICO® Score 10 T models were released in 2017 and 2020, respectively, but creditors have been using trended data for years.

For example, Experian offers tools that creditors can use to analyze trends in consumers' credit reports. Creditors can use a credit score that doesn't factor in trended data and combine it with this type of analysis to get a more complete picture of a consumer's behavior and creditworthiness. They can use these insights when making a decision to approve or deny a credit application as well as the interest rate, terms and credit limit on a new account.

Additionally, creditors might use trended data to help manage their customers' accounts. For instance, a credit card holder who consistently has high balances and pays their bill in full might get a credit limit increase to encourage or allow them to spend more. But a cardholder who has been making smaller and smaller payments over the past six months might have their credit limit decreased.

How Can Trended Data Impact Your Credit Scores?

Both VantageScore 4.0 and FICO® Score 10 T use trended data, but these competing credit scoring models might consider different trends in your credit history, or weight the data points differently. As is the case with every type of credit score, the impact of specific information depends on the credit scoring model and the credit report it's analyzing.

These two models use the same main scoring factors that impact the companies' other scoring models, such as your payment history, amounts owed, types of credit accounts you hold, the length of your credit history and new credit accounts. Consider the trended data as an addition to what affects your credit score rather than a replacement for the other factors.

How Can Trended Data Impact Your Mortgage Application?

In 2022, the Federal Housing Finance Agency (FHFA) announced mortgage lenders that want to issue conforming loans will need to transition to using the VantageScore 4.0 and FICO® Score 10 T in the coming years.

As a result, how you manage credit over time may have a greater impact on your mortgage applications than it has in the past. That said, mortgage lenders have considered trended credit data since at least 2016—though trended credit data didn't impact the credit score that mortgage lenders commonly used.

Manage Your Credit With Trended Data in Mind

Creditors can increasingly use trended data via internal analysis, third-party tools and credit scores. As a result, how you've managed credit over time could become increasingly important when you apply for new credit accounts or have open lines of credit. Keep this in mind and try to:

  • Maintain low utilization rates on revolving credit accounts, such as credit cards
  • Consistently pay down loans and credit balances over time
  • Try to make more than minimum payments on credit cards
  • Try to make more than the required payments on installment loans

Understandably, some people won't be able to afford to consistently make large payments or avoid high balances. But you can still set this as a goal, as these same behaviors can also help you get out of debt and save money.

Monitor Changes in Your Credit

You can create an Experian account to check your credit report and get credit monitoring for free. Your account can also show you some historical trends, such as your credit card balances and credit score over time. When you're ready to apply for a new credit card or loan, you can also use your account to get matched with offers based on your credit profile.