His bank cited “insufficient positive cash flow trend” as the denial reason even though Alex earned $110K, had a checking will rate an average of $1,200 and had three overdrafts in the previous six months. The bank's AI model flagged Alex as a higher risk compared to another person who makes $65K, uses only 40% of their credit line and also has an average daily balance of $4K, but never overdrafts.

In Atlanta, for example, Sarah was approved for a debt consolidation loan of $25,000 at a 7.9% interest rate on the same day she applied after showing a 690 FICO score and two late payments from 2021. Sarah used rent reporting out of monthly payments that had been made consistently on-time for the previous 14 months, as well as consistent deposits from freelance work occurring every 3 to 5 days, and averaged $2,800 in her account daily over the last six months. Under the new model, Sarah's cash-flow stability was considered more important than her prior late payment history.

Both Alex and Sarah's experiences are no longer considered outliers; numerous people face these challenges multiple times every single day.

Why Old Credit Rules Stopped Working in Practice

In the past, lenders used to rely heavily on two rules: "never let your credit utilization exceed 30% of your total credit limit" and "never close old credit accounts". And those were good rules until 2022. After 2022, lenders learned that many people who appear to be creditworthy based on their credit report and score actually have trouble paying their bills each month due to a lack of income. So lending institutions stopped following these rules and developed new systems to predict repayment based on the behavior of consumers today rather than the behavior of consumers five years ago.

Some examples taken from the presentations given by lending institutions at the Mortgage Bankers Association conference held in February 2025:

  1. Borrowers with a FICO score greater than 750 with an average daily balance of less than $500 were four and two-tenths times more likely to default than someone with a FICO score of 680 with an average daily balance of $2000.
  2. Someone with a perfect payment history coupled with many BNPL accounts was predicted to be at risk of default nearly as accurately as if they had recently filed for bankruptcy.
  3. If you had multiple recent inquiries on your credit report, a lender would automatically decline you for the majority of personal loans from the top ten lenders. 68% of applicants were denied by top ten lenders for this reason.

As a result of this data, lenders used different concepts and created models to determine what the indicators of successful repayment would be in 2025 versus 2015.

Factors that Will Affect Approval Decisions

Your modern score is composed of many sources; some of which you'll probably never know about.

  1. Average daily balances over the past 90 to 60 days may carry between 15% to 22% weight with most major lenders.
  2. Average Rent Utility Reporting alone over the 2024 period added 41 to 87 additional points for thin file borrowers.
  3. A negative bank day, even if it's just one day in the past 12 months, may trigger an automatic decline with LightStream, Upstart, and certain credit unions.
  4. Subscription Churn Rate - If you cancel three or more gym and streaming service subscriptions within a six-month timeframe, your internal score may drop between 40 and 90+ points with multiple fintechs.
  5. Deposit Frequency/Consistency (Income) now outweighs your Annual Income Amount with both LendingClub and Happy Money.
  6. Fraud Recognition Indicators of Device / IP Consistency at the time of Application - The use of a VPN and/or applying from a new state with no recorded recent transactions raises multiple red flags regarding fraud and may eliminate your offer.
  7. 'Buy Now Pay Later' (BNPL) Lines of Credit - Affirm, Klarna, and Afterpay now create a major positive impact to your credit report, when payments are made on time.

All of the above factors are the result of research and analysis conducted based on the default data collected post-2023 from millions of real loans; not hypothesized changes.

The use of tools such as our Loan Calculator to see lender requirements before applying for a loan is important.

Borrowers with true financial stability through real world data are the winners of lending in today’s economy. You must build a solid financial history for every single data point that banks use to evaluate you, rather than relying on just the three digits on your credit report.