3 ways card issuers now look beyond credit scores

Key Takeaways

• Card issuers are segmenting within credit tiers, treating high-balance revolvers differently from transactors even at the same FICO level
• With 20 million new accounts projected at Synchrony alone, winning approval matters less than winning primary card status through mobile apps
• Private-label, co-branded, and general-purpose cards let issuers capture the same consumer across different spending contexts

Capital One and Synchrony's Q2 2026 earnings reveal a shift in how large card issuers evaluate borrowers. FICO scores still matter, but lenders now draw finer lines within credit tiers, weigh mobile app engagement, and deploy different card products to capture the same consumer across spending contexts.

Why issuers now segment within prime and subprime

Capital One's treatment of the Discover portfolio it acquired illustrates the new approach. Discover had expanded credit during 2022 and 2023 before pulling back on originations and credit-line increases in late 2023. Since closing the acquisition, Capital One has tightened further in specific areas, particularly among high-balance revolvers it sees as vulnerable to financial pressure.

Chairman and CEO Richard Fairbank told analysts the company continues pursuing its "heavy spender franchise at the top of the market." He pointed to Capital One's originated upmarket portfolio as a better comparison with issuers that don't deliberately originate subprime accounts. The message: prime versus subprime is too blunt a distinction. Behavior within each tier drives underwriting.

PYMNTS Intelligence data shows why this matters. About 17% of U.S. consumers, roughly 44 million adults, are subprime. Of those, 55% struggle to pay monthly bills. Yet their card behavior is changing: the share that always or usually revolves balances fell from about 50% in mid-2023 to 38% in January 2026. Another 35% hold no credit or store card at all.

Synchrony has seen similar dynamics as it adds and renews major partners. When asked about the portfolio shifting toward higher-credit-quality consumers, CEO Brian Doubles said the company evaluates programs against long-term return requirements, including smaller programs. A FICO score establishes risk, but lenders also account for balance size, propensity to revolve, expected spending, and the economics of acquiring that specific account.

Opening accounts is only half the job now

Synchrony generated more than 5.1 million new accounts in Q2 and roughly 9.5 to 10 million in the first half. CFO Brian Wenzel said that trajectory points to about 20 million new accounts for 2026. The growth spans partners and retail categories rather than depending on a single program.

Capital One's next expansion could come from Discover once portfolio conversion completes. Half of Discover's new originations already run on Capital One technology, with the front book expected to be fully converted by the end of Q3 2026.

But opening an account no longer guarantees revenue. PYMNTS Intelligence found that 70% of cardholders use their primary card's mobile app. And 69% say app quality influences which credit card becomes their most-used card. That figure reaches 87% among Gen Z.

Nearly one-third of app users said they increased spending on a card after adopting its app. The implication is clear: an issuer can approve a customer and still capture little value if another card wins the digital relationship. Apps are where cardholders check balances, manage payments and rewards, and decide how actively to use the account.

One consumer, multiple card products

The third shift involves product architecture. Issuers are using different card types to capture consumers across credit and spending profiles.

Synchrony's Lowe's relationship shows this in practice. Its commercial co-branded card now operates alongside private-label and general-purpose options. The same consumer might carry a store card for home improvement purchases, a co-branded card for rewards on broader spending, and a general-purpose card for everything else. Each product fits a different use case and economic model.

This multi-product strategy lets issuers capture share of wallet they'd miss with a single card offering. It also complicates the competitive picture. A consumer isn't choosing one issuer over another. They're assembling a portfolio of cards, each optimized for specific spending.

What this means for subprime lending

Subprime remains a sizable market, but it's increasingly defined by cash-flow pressure and changing credit use rather than FICO scores alone. The drop in revolving behavior among subprime consumers suggests some are managing debt more carefully, while others have exited credit products entirely.

For issuers comfortable with subprime origination, the opportunity may lie in consumers whose scores understate their actual credit management. For those focused on prime, the contest shifts to app quality and rewards structures that win primary card status.

Frequently Asked Questions

Why are card issuers looking beyond credit scores?

Issuers found that FICO scores alone don't capture behavior differences within credit tiers. Factors like revolving propensity, balance size, and cash-flow pressure better predict profitability and loss risk.

How many new credit card accounts are being opened in 2026?

Synchrony alone projects about 20 million new accounts for 2026, based on 9.5-10 million opened in the first half. Capital One's Discover integration will add to industry volume.

Why do mobile apps matter for credit card issuers?

70% of cardholders use their primary card's app, and 69% say app quality influences which card they use most. Nearly one-third increased spending after adopting a card's app.

What percentage of subprime consumers revolve credit card balances?

38% of subprime consumers always or usually revolve balances as of January 2026, down from about 50% in mid-2023.

How are issuers using multiple card products for one consumer?

Issuers offer private-label, co-branded, and general-purpose cards to capture different spending contexts. A consumer might use a store card for specific retailers and a general-purpose card for other purchases.

Source: PYMNTS | / PYMNTS