Federal housing officials on Wednesday said they are moving forward with a long-awaited overhaul of mortgage credit scoring, allowing the use of VantageScore 4.0 across government-backed loans and opening the door to more competition in how borrowers are evaluated.
The Federal Housing Finance Agency and Department of Housing and Urban Development jointly announced that VantageScore 4.0 will now be accepted by Fannie Mae and Freddie Mac, with the Federal Housing Administration also moving to adopt the model, officials said. The agencies are also advancing plans to incorporate FICO Score 10T alongside VantageScore 4.0 as part of a broader modernization effort.
“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,” HUD Secretary Scott Turner said in the announcement.
The shift marks a significant break from the longstanding reliance on legacy FICO models and is intended to modernize underwriting while expanding access to credit. FHFA Director William J. Pulte said in the news release that the move brings “more predictive models” into the mortgage process and will help borrowers who consistently pay rent qualify for home loans.
The changes build on the Credit Score Competition Act and a 2022 decision by the FHFA to approve both VantageScore 4.0 and FICO 10T for use in mortgage lending, though implementation has taken several years to roll out.
In a separate announcement, Fannie Mae said it is updating its selling guide to allow lenders to use VantageScore 4.0 immediately, calling the change a key milestone in its credit score modernization effort.
VantageScore 4.0 uses trended credit data — or a more comprehensive look at how a borrower’s balances and payments change over time, rather than a single snapshot — and can incorporate payment histories such as rent and utilities, which supporters say can better capture borrower behavior and bring more “credit invisible” consumers into the market.
Officials and industry groups have framed the change as a way to increase competition in a credit scoring market long dominated by a single model. That competition could reduce costs for lenders and potentially expand access to mortgage credit, according to statements released alongside the announcement.
Credit bureau Experian said it is working with lenders to support the transition.
“This moment creates a clear path to demonstrate the real-world performance of VantageScore 4.0 at scale,” Michele Bodda, the company’s president of housing, said in an announcement.
The policy change is expected to roll out gradually as lenders update systems and underwriting processes, but it signals one of the most significant shifts in mortgage credit evaluation in decades.
