A big change is coming to how Americans apply for mortgages—and it could work in your favor. If you have ever paid rent on time and felt frustrated that it did not help your credit score, things are about to shift. A new credit scoring model called VantageScore 4.0 will soon be accepted for loans backed by Fannie Mae and Freddie Mac—and that could open the door to homeownership for millions of people. Here is what you need to know about how this change could impact you, especially if you are hoping to qualify for a mortgage soon.
What is vantagescore and how is it different from fico?
VantageScore is a credit scoring model created by the three major credit bureaus—Equifax, Experian, and TransUnion—as an alternative to FICO, which has long dominated the mortgage industry.
Here is how VantageScore 4.0 stands out:
- It includes non-traditional data, such as rent and utility payments
- It is designed to help people with limited credit history qualify for loans
- It updates more frequently and considers recent activity more heavily than FICO
Kevin Thompson, CEO of 9i Capital Group, put it simply:
“VantageScores are considered more flexible than traditional credit scores. They incorporate both financial and non-financial data—like utility and rent payments—to help establish creditworthiness.”
How does this change mortgage qualifications?
Until now, Fannie Mae and Freddie Mac have only accepted FICO scores. But starting soon, they will also allow lenders to use VantageScore 4.0 when evaluating mortgage applications.
This is big news because:
- Many people who have never used credit cards or loans but always pay rent on time will finally get credit for it
- You may be able to qualify for a mortgage even if your traditional credit score is not strong
- The change could make homeownership more accessible, especially for younger adults and renters
Bill Pulte, director of the Federal Housing Finance Agency (FHFA), called this a major win. He wrote on X:
“Credit history will no longer just include credit cards and loans. This is HUGE.”
What does this mean for fannie mae and freddie mac borrowers?
If you are applying for a mortgage backed by Fannie Mae or Freddie Mac, your lender will now have the option to use your VantageScore. This can work in your favor if:
- You have little or no credit card history
- You consistently pay rent, electric, phone, or internet bills
- You are trying to boost your credit score using everyday payments
Just keep in mind that it is still up to the lender which score they use. Some may stick with FICO, while others will start using VantageScore more often.
Will vantagescore make it easier to buy a home?
In many cases, yes. This change is aimed at giving more Americans a fair shot at buying a home. But it does not mean everyone will qualify instantly or get the best deal.
Kevin Thompson warns:
“Even if the VantageScore appears solid, financial institutions may still view these borrowers as higher risk and compensate by charging higher interest rates.”
So while more people may get access, it could come at a price—possibly higher monthly payments if the interest rate is higher.
What do experts say about the impact?
Financial literacy expert Alex Beene told Newsweek that while this is a positive step, there is still a lot that needs to be figured out.
“Obviously, the goal is to get more borrowers to qualify for a mortgage, but just how making bill payments will dramatically do so is still a work in progress.”
In other words, this new model has potential—but how it plays out in real life depends on how lenders choose to use it and whether it leads to better deals for homebuyers.
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