Fannie Mae and Freddie Mac are making a major change to how Americans may qualify for a mortgage.
The government-backed mortgage giants said Wednesday they will begin allowing loans evaluated using VantageScore 4.0, a newer credit scoring model that can incorporate data such as rent and utility payment history.
The change will initially roll out on a limited basis, beginning with a group of approved lenders, as part of a broader credit score modernization effort led by the Federal Housing Finance Agency (FHFA).
“It is only thanks to President Trump’s landslide victory and leadership that we finally broke the gridlock to do this – what’s right for the American people over Washington’s special interest,” FHFA Director William Pulte said at a Wednesday press conference. “Fannie and Freddie, as I said, are ready to immediately start working with approved lenders to accept VantageScore loans.”
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Pulte added that Freddie Mac has already begun testing the model, taking delivery of about $10 million in loans evaluated using VantageScore, which are expected to be securitized.
“If you paid your rent for 10 years, that should be factored into your credit score,” Pulte said. “So, I think it will save lots of money. And this truly is the golden age of home buying.”
He also estimated that the change could affect “tens of millions” of Americans.
During the limited rollout, approved lenders may choose between VantageScore 4.0 and traditional FICO scores.
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A second updated model, FICO Score 10T, is also expected to be introduced as part of the modernization initiative.
FICO 10T also factors in both positive and negative rental payment history when reported to credit bureaus.
“By incorporating newer models with more predictive power, we can support sustainable access to homeownership and keep safety, soundness, and operational readiness at the center,” Jake Williamson, executive vice president and head of single-family at Fannie Mae, said in a statement.
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Efforts to modernize credit scoring have been underway for years. In 2022, federal regulators approved both VantageScore 4.0 and FICO 10T after extensive testing, according to Freddie Mac.
Pulte also signaled the shift last year, noting in a post on X that “credit history will no longer just include credit cards and loans.”
FOX Business’ Daniella Genovese contributed to this report.
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