--- title: "Beyond the Numbers: Addressing Systemic Challenges in Credit Scoring" description: Explore systemic challenges in credit scoring and discover how alternative methods promote fairness, inclusion, and access to credit for all. image: https://trustscience.com/hubfs/Blog-Cover-pdf.jpg --- [![Trust Science Logo (Menubar)](https://trustscience.com/hubfs/Trust%20Science%20Logo%20(Menubar).jpg)](https://trustscience.com) - Solutions - [Credit Bureau+™](https://trustscience.com/credit-bureau) - [T°Score™](https://trustscience.com/t-score) - [CashFlow+™](https://trustscience.com/cashflow) - [Services](https://trustscience.com/services) - Industries - [Auto Lenders](https://trustscience.com/auto-lenders) - [Installment & Single Repayment Lenders](https://trustscience.com/installment-single-repayment-models) - Company - [About Us](https://trustscience.com/about) - [Our Team](https://trustscience.com/team) - [Press Releases](https://trustscience.com/blog/tag/press-releases) - [Careers & Culture](https://trustscience.com/careers) - [Patents](https://trustscience.com/technology-patents) - [Resources](https://trustscience.com/resources) - [Marketing Channel Partners](https://trustscience.com/partners) - [News & Blog](https://trustscience.com/blog) - [Events](https://trustscience.com/events) - [Gartner Research](https://trustscience.com/resources/gartner-research-mentions) - Support - [Consumer Disclosure](https://trustscience.com/legal/consumer) - [Consumer Resources](https://trustscience.com/legal/help-page) [CONTACT US](https://trustscience.com/contact) [REQUEST A DEMO](https://trustscience.com/demo) Blogs # Beyond the Numbers: Addressing Systemic Challenges in Credit Scoring Explore systemic challenges in credit scoring and discover how alternative methods promote fairness, inclusion, and access to credit for all. [Trust Science](https://trustscience.com/blog/author/trust-science) Jul 8, 2024 Designed to provide a neutral comparative estimate of a borrower’s creditworthiness, credit scores play a pivotal role in determining access to wealth, housing, and job opportunities. However, systemic challenges have some groups slipping between the cracks of conventional credit.  ## **Credit Scoring: The Basics** Prior to the modern credit scoring system, lenders deemed borrowers creditworthy by evaluating their income, marital status, ethnic background, credit history, and age.  Credit scoring was revolutionized in 1956 when Fair, Isaac, and Company (FICO) was established by Bill Fair and Earl Isaac. They developed a system that used statistical models to generate credit scores, ostensibly eliminating the subjectivity associated with the previous credit scoring models. While these advancements made credit scoring more objective and widespread, they also brought about new limitations that are still in place today.  There are 5 core metrics of traditional credit scoring systems: - **Payment History (35%): **whether you’ve paid your bills on time - **Amounts Owed (30%): **the total amount of debt you have & your credit utilization rate - **Length of Credit History (15%): **the average age of your credit accounts - **New Credit (10%): **the number of credit accounts you’ve opened recently and how many “hard inquiries” lenders have made in the past year - **Credit Mix (10%): **the types of different credit accounts you have ## **The Shortcomings of Conventional Credit** While not explicitly biased, this data may be influenced by generational wealth that is disproportionately distributed. Redlining—denying people access to credit because they live in a certain neighborhood—has made financial services like mortgages unattainable for some groups in the past, impeding the process of buying a home.  The Equal Credit Opportunity Act outlawed redlining in 1974, but because wealth is passed down through homeownership, its legacy persists. Marginalized groups are still more likely to rent rather than own property, resulting in sparse or negative credit histories because rental payments, unlike mortgage payments, are not considered in conventional credit scoring models. As such, FICO data points like payment history and credit length may reflect—and continue to perpetuate—longstanding disparities in wealth-generating opportunities. ## **Moving Towards a Fair and Inclusive Scoring System** Alternative credit scoring uses non-traditional data sources like rent and utility payments, phone bills, and bank transactions. These methods aim to provide a more holistic assessment of an individual’s creditworthiness by minimizing the reliance on potentially biased or limited data sources. Alternative credit scoring can make credit more inclusive, accurate, adaptable, and accessible. Approximately 1 in 5 Americans are Invisible Prime™ borrowers, unable to be assessed accurately by conventional credit scoring models, representing over $100 billion dollars in unallocated capital. Trust Science leverages thousands of data points from traditional, alternative, and proprietary sources on a powerful explainable AI and ML platform to help lenders stop missing deserving borrowers.     [Blogs](https://trustscience.com/blog/tag/blogs) ## Similar posts Case Studies ### [The Trust Science® Advantage: Installment Lending Case Studies](https://trustscience.com/blog/the-trust-science-advantage-installment-lending-case-studies) Limited, overlapping, and restrictive data sets and criteria for traditional credit reporting result in inaccurate and rigid credit scores. Trust Science May 21, 2025 Blog Archive ### [How to Build a Credit Scoring Model – Part 2](https://trustscience.com/blog/how-to-build-a-credit-scoring-model-part-2) More than half of Americans are either credit invisible, which means not having an established credit history with a major credit bureau Trust Science May 7, 2019 Blog Archive ### [COVID-19 Has Revealed the Faults in Static Credit Scoring: Here’s How to Adapt](https://trustscience.com/blog/covid-19-has-revealed-the-faults-in-static-credit-scoring-heres-how-to-adapt) Conventional credit scores are used by financial institutions to inform their lending decisions, known as a quantitative way to assess... 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