July 9, 2025
Freddie Mae and Fannie Mac at the moment are allowed to calculate lease historical past within the algorithm for figuring out credit score historical past mortgage approval.
Fannie Mae and Freddie Mac will now use a number of strategies to evaluate mortgage candidates because of a brand new determination by the Federal Housing Finance Company (FHFA).
Each Fannie Mae and Freddie Mac again practically half of all U.S. mortgages. The establishments will now contemplate a possible homebuyer’s VantageScore 4.0 alongside the normal FICO 10T mannequin.
FHFA Director William Pulte introduced on X that mortgage lenders can now choose both credit score scoring mannequin with no need to reconfigure their techniques and algorithms. This marks a shift away from beforehand proposed dual-score mandates.
“Efficient immediately, to extend competitors within the Credit score Rating Ecosystem and in keeping with President Trump’s landslide mandate to decrease prices, Fannie and Freddie will ALLOW lenders to make use of Vantage 4.0,” Pulte wrote.
Federal Housing Finance Lenders will proceed to obtain credit score experiences from all three main bureaus.
Nonetheless, VantageScore 4.0, developed by Experian, Equifax, and TransUnion, can incorporate various knowledge, resembling lease, utility, and telecommunications funds, into its calculations.
The intent is to broaden mortgage entry for “forgotten” debtors, together with renters and rural residents. Moreover, the transfer will open entry to homeownership to these with restricted credit score histories. FHFA estimates the change might open the door to homeownership for as much as 5 million individuals. Economist Joel Berner spoke to the Realtor about the advantages of the change.
“This could assist people with thinner credit score information get certified for mortgages, which can add to the pool of potential homebuyers and increase the market as a complete,” says Berber. “Individuals who haven’t taken out a lot debt on issues like auto loans or bank cards can have the chance for his or her rental historical past to assist them qualify for a mortgage.”
The announcement despatched FICO inventory tumbling, with shares dropping as much as 15% earlier than partially recovering. Whereas FICO stays dominant, the introduction of VantageScore 4.0 breaks its unique maintain and should put stress on pricing, the Wall Avenue Journal reported.
The FHFA’s initiative follows its 2022 directive validating each FICO 10T and VantageScore 4.0 for GSE-backed loans and launching efforts to transition from tri-merge to dual-merge credit score reporting by late 2025.
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