VantageScore or FICO for homebuyers
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When it comes to homebuyers‘ credit scores, changes are under way — and there could be more to come.
After decades of allowing lenders to only factor a “classic” score from provider FICO into their decision to extend a loan, Fannie Mae and Freddie Mac — government-sponsored enterprises that purchase mortgages and then bundle and sell them to investors — are now also permitting them to use VantageScore 4.0, a score from credit bureaus Equifax, Experian and TransUnion. The change applies to all mortgages sold to Fannie and Freddie.
This is an expansion of a limited rollout, announced in April, which involved about 50 mortgage lenders, according to a Sept. 3 post on X from Bill Pulte, director of the Federal Housing Finance Agency, which oversees Fannie and Freddie.
For consumers, the significance is that VantageScore 4.0 uses data points that a classic FICO score doesn’t consider, such as rent payments — which could help some homebuyers qualify for a mortgage or get a better interest rate on their loan, experts say.
About a third of mortgage denials for primary home purchases with conventional loans in 2025 were due to a lack of credit history, according to Zillow’s analysis of 2025 Home Mortgage Disclosure Act data.
Another newer credit score model, FICO 10T, which uses similar alternative data, is expected to be approved for use in mortgages by FHFA in the coming months. Separately, the Federal Housing Administration will begin insuring mortgages underwritten with VantageScore 4.0 and FICO 10T starting on Jan. 1.
FHFA may reduce credit report requirements
Additionally, Pulte said on his Sept. 3 X post that FHFA is “seriously considering” reducing the number of credit reports and scores needed for lenders to evaluate a potential homebuyer to two and, the following day in a separate X post, said the agency is “also studying” the use of a single credit report in the mortgage application process. The agency did not respond to CNBC’s request for more information.
Currently, lenders are required to do a so-called tri-merge, which involves getting data about a mortgage applicant from all three large credit-reporting companies: Equifax, Experian and TransUnion. Because there are differences in the credit scores that each firm provides, lenders typically use the middle score in their calculation.
While a bi-merge, as it’s called, potentially could reduce the cost of pulling credit reports — which has risen sharply in the past several years — it would create a new problem, said John Ulzheimer, a credit expert and president of The Ulzheimer Group in Atlanta.
“Not all credit reports are the same, and [the lender] may miss something by not pulling all three,” Ulzheimer said.
How rent, utility data may help some borrowers
VantageScore is a joint venture owned by Equifax, Experian and TransUnion. It was created in 2006 as a competitor to the FICO score, which has been around since 1989.
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