July 9, 2025
Freddie Mae and Fannie Mac are now allowed to calculate rent history in the algorithm for determining credit history loan approval.
Fannie Mae and Freddie Mac will now use multiple methods to assess mortgage applicants due to a new decision by the Federal Housing Finance Agency (FHFA).
Both Fannie Mae and Freddie Mac back nearly half of all U.S. mortgages. The institutions will now consider a potential homebuyer’s VantageScore 4.0 alongside the traditional FICO 10T model.
FHFA Director William Pulte announced on X that mortgage lenders can now choose either credit scoring model without needing to reconfigure their systems and algorithms. This marks a shift away from previously proposed dual-score mandates.
“Effective today, to increase competition in the Credit Score Ecosystem and consistent with President Trump’s landslide mandate to lower costs, Fannie and Freddie will ALLOW lenders to use Vantage 4.0,” Pulte wrote.
Federal Housing Finance Lenders will continue to receive credit reports from all three major bureaus.
However, VantageScore 4.0, developed by Experian, Equifax, and TransUnion, can incorporate alternative data, such as rent, utility, and telecommunications payments, into its calculations.
The intent is to broaden mortgage access for “forgotten” borrowers, including renters and rural residents. Additionally, the move will open access to homeownership to those with limited credit histories. FHFA estimates the change could open the door to homeownership for up to five million people. Economist Joel Berner spoke to the Realtor about the benefits of the change.
“This should help folks with thinner credit files get qualified for mortgages, which will add to the pool of potential homebuyers and boost the market as a whole,” says Berber. “People who haven’t taken out much debt on things like auto loans or credit cards will have the opportunity for their rental history to help them qualify for a loan.”
The announcement sent FICO stock tumbling, with shares dropping up to 15% before partially recovering. While FICO remains dominant, the introduction of VantageScore 4.0 breaks its exclusive hold and may put pressure on pricing, the Wall Street Journal reported.
The FHFA’s initiative follows its 2022 directive validating both FICO 10T and VantageScore 4.0 for GSE-backed loans and launching efforts to transition from tri-merge to dual-merge credit reporting by late 2025.
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