Mortgage giants Fannie Mae and Freddie Mac announced yesterday the beginning of a pilot program to accept assessed using VantageScore 4.0, which uses trended financial data to give consumers credit for on-time rent payments, among other advancements.
The Department of Housing and Urban Development also announced the adoption of modernized credit scoring models for underwriting Federal Housing Administration loans, although an exact timeline wasn’t given. Together, the FHA and GSEs back or insure the vast majority of mortgage loans in the U.S.
“We are modernizing credit scoring with more predictive models, helping millions of Americans who responsibly pay rent qualify for mortgages,” says Federal Housing Finance Agency Director Bill Pulte in .
Keep reading to learn more about how these changes could impact mortgage applicants in 2026.
Limited Rollout Will Be Followed by Broader Use
With today’s changes, are implementing a new credit scoring system for the first time in decades. But the adoption of alternative credit scoring models has been a long time in the making.
The , signed into law in 2018, sought to modernize mortgage lending by requiring the FHFA to establish processes for Fannie and Freddie to approve new credit scoring models.
Nearly a decade after the bill was first introduced in 2017, the GSEs are implementing the use of VantageScore 4.0 as a “limited rollout to approved lenders” to ensure operational readiness before broad availability. VantageScore says it can score 33 million more consumers under its 4.0 version compared with earlier credit scoring models.
Lenders that are not participating in the initial rollout will continue using .
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The changes only begin with VantageScore 4.0. Soon, lenders will be permitted to use FICO 10T for loans delivered to Fannie and Freddie.
Like VantageScore 4.0, FICO 10T uses trended credit data to score millions more consumers than before. FICO says that mortgage approvals can increase by 5% without adding risk for lenders under 10T compared with the current scoring models.
“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,” says Jake Williamson, executive vice president at Fannie Mae, in a .
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Newer Credit Scoring Models Could Reduce Costs
The Mortgage Bankers Association, an industry trade group, has long advocated for further modernization of credit scoring. By allowing for more scoring models to participate in mortgage lending, competition could drive down prices for consumers at a time when housing costs are prohibitively high for many.
“Expanding the set of acceptable credit scoring models to include VantageScore 4.0 and FICO 10T will help foster a more transparent and dynamic market, broaden access to sustainable credit, and put downward pressure on costs for GSE and FHA borrowers,” says MBA president and CEO Bob Broeksmit, in a statement.
Though, the fee to run your credit report accounts for a very small portion of your closing costs.
Ultimately, the adoption of additional credit scoring models in the mortgage industry is just one piece of the puzzle when it comes to fixing housing affordability. For meaningful changes to be felt in consumers’ pockets, more work will need to be done to bring wages, home prices and mortgage costs into better equilibrium.
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