The Federal Housing Administration along Fannie Mae and Freddie Mac are implementing their first new credit score models for mortgages in decades, HUD Secretary Scott Turner and FHFA Director William J. Pulte announced Wednesday.
The agencies will permit the use of VantageScore 4.0 and FICO 10T as eligible credit scoring models for FHA-insured mortgage underwriting. The models will factor a good history of rent payments.
“By embracing additional predictive credit scoring models, we are taking a meaningful step toward expanding access to homeownership – particularly for creditworthy borrowers who may have been overlooked under older systems” said HUD Secretary Scott Turner. “This exciting announcement is in service to President Trump’s promise to restore the American Dream of Homeownership.”
Turner and Pulte said at a press conference in Washington, D.C., that the move is intended to lower costs for the American people after years of rising prices under the “status quo” credit score system.
“We are happy to announce that effective immediately, Fannie Mae and Freddie Mac are accepting new, modern credit scores that give American home buyers the credit they deserve for paying their rent. If you pay on time, you’re more likely to pay your mortgage on time for decades,” Pulte said at the press conference.
“If you had mortgage history, it didn’t necessarily count towards your credit score. Well, that’s nonsense, because credit history should include rental history, and so this is a very big deal,” he said.
Predictive Algorithms
VantageScore is a consumer credit scoring model developed by the three major credit bureaus—Equifax, Experian, and TransUnion. VantageScore utilizes predictive algorithms to assess creditworthiness based on payment history, debt, and credit usage. The model is known for scoring consumers with limited credit history and is used by thousands of lenders.
FICO Score 10T is a highly predictive, modernized credit scoring model that incorporates “trended data,” analyzing more than 24 months of credit behavior rather than just a snapshot in time—to evaluate payment patterns and debt management.
Fannie Mae and Freddie Mac are moving forward with VantageScore 4.0 and FICO Score 10T, updating their selling guides with the new scores and immediately accepting Vantage-scored loans from approved lenders, the administrators said. That advances the full implementation of the Credit Score Competition Act of 2018 as signed by President Trump, bringing greater choice and flexibility to borrowers, Turner and Pulte said.
“Thanks to President Trump’s leadership, we are driving down costs across the homebuying process,” Pulte said. “We are modernizing credit scoring with more predictive models, helping millions of Americans who responsibly pay rent qualify for mortgages. That’s fair, it’s commonsense, and it’s finally delivering the benefits of competition to homebuyers nationwide.”
Turner said the move is common sense.
“The reason we’re doing this is that credit scores are a very valuable tool, as the director has stated. They serve as a signal to lenders and equip them with information to make financially responsible decisions. Our announcement today will enable competition among different credit scoring models so we can make housing more affordable and more available for prospective home owners. It’s common sense that’s allowing more,” Turner said.
CHLA Letter Praises Move
The Community Home Lenders of America issued a statement in response to Wednesday’s announcement by FHFA and HUD.
“CHLA Commends FHFA Director Pulte and HUD Secretary Turner for their announcement that they would begin accepting Vantage 4.0 now and 10T later as eligible credit scoring models on GSE and FHA loans,” said Scott Olson, Executive Director for CHLA. “This is a very good first step – and CHLA continues to call for longer term actions to create more competition, like Fannie and Freddie developing their own credit score capabilities.”
CHLA sent a letter last week to FHFA Director Pulte asking FHFA to fast track Vantage Score, to create more competition in the credit score market where FICO has historically had a virtual monopoly and has raised its price by 1,567% in the last three and 1/2 years.
CHLA said it long has been vocal about bringing more competition to the credit score industry since FICO first started raising prices in 2023 – releasing its CHLA White Paper on Mortgage Credit Score Markets and Pricing in January 2024 – and three weeks ago by updating that White Paper.
