In use for more than 25 years and the preferred credit scoring system for 90 percent of top lenders, the FICO Score has long been the dominant metric of creditworthiness for auto lending, credit card decisioning and, of course, mortgage lending.

Yet, despite that dominance, FICO is currently facing internal changes and external pressures from both business and government interests, and when the dust settles, the mortgage landscape could be a markedly different place.

The problem with FICO

The chief issue with FICO is relevance. Because consumers only develop their traditional credit score by using forms of credit – in other words, having a statement balance and paying it off – millions of consumers lack a suitable score. According to recent analysis from the Consumer Financial Protection Bureau, 26 million consumers are “credit invisible,” meaning they have no information on their credit reports and thus have no score, while an additional 19 million have credit reports, but the information is insufficient to generate a credit score.

FICO has also come under fire for the credit systems it does consider. In particular, FICO’s incorporation of complex medical debts and student loans has been criticized, as has its relative disregard for cash flows and more recent credit histories.

Competition amongst credit scores

In light of those criticisms, a number of competitors have emerged, all proclaiming to offer more modern and accurate credit scores for consumers. The most notable alternatives are:

•CreditVision Link – Called the “first credit score in market to combine both trended credit bureau data and alternative data sources,” the CreditVision Link from TransUnion utilizes alternative databases of more than three billion non-traditional data records from sources including property/tax deed records, checking/debit accounts and payday lenders.

•SoFi – A relatively new finance company, SoFi became the first major lender to remove FICO data from its mortgage approval process, and to instead use an in-house measurement that tracks savings, cash flow, payments of non-credit bills and future earnings. Mike Cagney, the CEO, chairman and co-founder of SoFi, explained in early 2016 that creditworthiness should be based on “applicants who have historically paid their bills on time and make more money than they spend. It’s that simple.”

•eCredable – An independent credit bureau, eCredable allows consumers to create an account (free for a basic plan, $19.95 per year for the “PLUS Plan”) and develop their own credit file. By documenting their payment history of rent, utilities, mobile phones and cable television, consumers provide eCredable with a complete picture of their finances, which the credit bureau uses to develop a credit score.

•VantageScore – Used by more than 2,000 lenders, including seven of the 10 largest banks and three of the largest mortgage originators, VantageScore bills itself as a “state-of-the-art consumer credit scoring technology.” Using data from Equifax, Experian and TransUnion, VantageScore proclaims its model to be more predictive, consistent and versatile than older systems.

The future of FICO

FICO is also facing heat from legislators. In the last year, two high-profile bills have been introduced in the House of Representatives seeking to dramatically reform how credit scores are utilized in the mortgage process.

The first, the Credit Score Competition Act of 2015, or HR 4211, will change the requirements Fannie Mae and Freddie Mac adhere to for credit scores, and will allow the GSEs to consider alternative credit scoring models when guaranteeing mortgages. The second, the Credit Access and Inclusion Act of 2015, will amend the Fair Credit Reporting Act and allow utility providers and telecommunication companies to report consumer payment histories to credit reporting agencies; the act picked up the support of the National Association of Realtors earlier this year, and like HR 4211, it is currently referred to the House Committee on Financial Services.

To be fair, FICO has made changes in recent in years. Back in 2014, FICO revised its formulas to avoid penalizing consumers with paid and unpaid medical debts, and last fall, the company partnered with Equifax and LexisNexis Risk Solutions to create FICO XD, a more modern, wide-ranging score that covers utility bills and cable/cell phone payment history.

But with those House bills making their way through committee and alternative scoring systems only growing in prominence, it may be too little, too late for FICO.