The following post is provided by Open Lending, a MeridianLink® Marketplace partner.
Over the last decade, the definition of a “prime” credit customer has shifted significantly. While the average consumer credit score has risen since 2020, that increase masks a more complicated reality shaped by economic intervention, changes in credit reporting, rapid score-building tools, and evolving dispute and fraud tactics. As a result, today’s prime borrower often does not perform the way historical models expect.
This blog explores why credit scores are inflated, how borrower behavior has changed, and why lenders must rethink risk assessment in 2026 and beyond.
1. The rise of credit score migration
Credit score migration refers to how consumers move between score tiers over time. Historically, this movement reflected gradual behavioral improvement. Over the last decade, especially during and after the COVID-19 pandemic, migration accelerated dramatically.
The pandemic-era stimulus, forbearance programs, payment deferrals, and suppressed delinquencies temporarily boosted scores across all risk tiers. Many consumers migrated out of subprime and near-prime categories without demonstrating durable improvements in credit behavior. Once relief programs ended, delinquency patterns often reverted, revealing that the score gains were not supported by long-term repayment capacity.
Credit bureaus later confirmed that many borrowers who climbed into higher score bands during this period performed more like their prior risk tiers once economic conditions normalized.
Takeaway:
The upward score migration of 2020–2023 was historically abnormal and does not reliably reflect lasting creditworthiness.
2. Bureau and policy changes that raised scores
Policy-driven changes to credit reporting have also contributed to population-level score increases.
One notable example is the CFPB’s Human Trafficking Final Rule, which requires bureaus to block adverse information related to trafficking once documentation is provided. This rule is essential for protecting survivors and enabling recovery, but it also removes derogatory tradelines that previously signaled elevated risk.
While the impact is targeted rather than universal, it contributes to cleaner reports and higher scores that may not fully capture historical repayment behavior.
3. Credit builder products and accelerated score growth
The last decade, especially during and right after 2020, saw significant growth in credit-building products designed to increase scores quickly, often faster than true financial capability improves.
Secured credit cards report payment history and utilization just like unsecured cards, allowing consumers to manufacture positive indicators with limited exposure. Low balances and on-time payments can elevate scores into prime ranges without demonstrating experience managing broader revolving or installment debt.
Credit builder and passbook loans further accelerate this effect. Because funds are often secured or paid before disbursement, borrowers are not managing traditional risk, yet these products still boost scores through reported payment history.
Takeaway:
Modern credit-building tools enable rapid upward score migration, but they often improve scores faster than real-world repayment performance.
4. First-party fraud and emerging dispute tactics
Credit bureau data integrity has also been impacted by rising first-party fraud, where consumers dispute legitimate debts by claiming identity theft, fraud, or, in some cases, trafficking-related victimization.
While trafficking protections are legally required and critically important, regulators and bureaus acknowledge the potential for misuse. In some cases, borrowers falsely claim eligibility to remove accurate tradelines, inflating scores and reducing transparency for lenders.
This creates a growing challenge: scores that appear strong but are partially constructed through aggressive or fraudulent dispute activity.
5. Why “prime” doesn’t perform like it used to
Taken together, these forces lead to a clear conclusion:
Today’s prime score is not equivalent to yesterday’s prime score.
Key reasons include:
- Temporary economic relief artificially inflating scores.
- Faster, easier score improvement through credit-building products.
- Cleaner, but less complete, bureau files due to removals and disputes.
- Borrowers reverting to historical behavior after upward migration.
As a result, lenders relying solely on score cutoffs are increasingly exposed to hidden risk.
Final thoughts: What lenders should do next
Credit scores still matter, but they must be contextualized. To adapt, lenders should:
- Incorporate behavior-based and trended credit data.
- Use cash flow underwriting to offset superficial score inflation.
- Adjust models for pandemic-era distortions.
- Identify synthetic score inflation patterns.
- Strengthen fraud detection around dispute activity.
The last decade fundamentally changed what a credit score represents. Lenders who recognize this shift will assess risk more accurately and build stronger portfolios in the years ahead.
