Mortgage lending practices are shifting as government-sponsored enterprises expand the credit scoring models available to lenders. Fannie Mae and Freddie Mac have broadened their policies to permit the use of VantageScore 4.0 in addition to the traditional FICO score that has dominated the industry for decades. This change represents an expansion of a more limited pilot program that began in April and involved approximately 50 mortgage lenders.
VantageScore 4.0, created by the three major credit bureaus—Equifax, Experian, and TransUnion—incorporates data points that conventional FICO scores do not evaluate, such as rental and utility payment histories. For borrowers with thin credit files, this alternative scoring methodology could improve their chances of loan approval or access to better interest rates. According to mortgage lending data from 2025, roughly one-third of conventional mortgage denials for primary residences were attributed to insufficient credit history, highlighting a significant obstacle for some homebuyers.
Additional scoring innovations are also entering the mortgage market. FICO 10T, another newer model that incorporates alternative data similar to VantageScore 4.0, is anticipated to receive regulatory approval for mortgage use in the coming months. Starting on January 1, the Federal Housing Administration will begin insuring mortgages underwritten with both VantageScore 4.0 and FICO 10T.
Regulatory agencies are also contemplating structural changes to the mortgage application process. The Federal Housing Finance Agency has indicated it is seriously considering reducing the number of credit reports required from three to two and is separately studying the feasibility of using a single credit report. Currently, lenders must obtain tri-merge reports from all three major credit bureaus. While reducing this requirement could lower costs associated with credit report pulls, which have increased substantially in recent years, industry experts caution that such changes could result in missing important credit information.
One practical challenge for borrowers considering VantageScore 4.0 is accessibility. While FICO offers subscription services providing various score versions starting at $29.95 monthly, VantageScore 4.0 is available free only through specific channels such as Synchrony Bank accounts. Additionally, rental payment data is not yet widely reported to credit agencies, though reporting has begun to expand gradually among renters and property managers.
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