The Trump administration has announced a major overhaul to the credit scoring system used for mortgages, calling it the first meaningful update in decades. Federal agencies and mortgage giants Fannie Mae and Freddie Mac will now begin accepting newer credit score models that supporters say could make it easier for more Americans to qualify for home loans.
The policy shift is being framed as an effort to revive a sluggish housing market and reduce barriers for first-time buyers who have been squeezed by high home prices, elevated mortgage rates, and tighter lending standards. It also marks a direct challenge to the long-standing dominance of traditional FICO-based mortgage underwriting.
A historic shift in mortgage credit scoring
The U.S. Department of Housing and Urban Development (HUD) described the announcement as a “historic move” aimed at lowering housing costs for Americans after years of rising prices under the previous system.
For decades, lenders have relied heavily on older credit score models when deciding who qualifies for a mortgage. Critics argued those systems failed to reflect how many modern consumers manage money, especially renters and younger borrowers with limited traditional credit histories.
The Federal Housing Administration (FHA), along with mortgage finance giants Fannie Mae and Freddie Mac, are adopting updated credit score models for mortgage underwriting.
The FHA plays a critical role in expanding access to homeownership because it insures loans for borrowers who may have lower credit scores or smaller down payments. Fannie Mae and Freddie Mac, meanwhile, support roughly 70% of the U.S. mortgage market, making any underwriting changes highly significant for lenders and buyers alike.
New models being accepted
Under the changes announced by HUD Secretary Scott Turner, the FHA will permit the use of VantageScore 4.0 and FICO 10T as eligible credit scoring models for FHA-insured mortgage underwriting.
Fannie Mae and Freddie Mac are also updating their selling guides and will “immediately” begin accepting Vantage-scored loans from approved lenders, according to HUD. Officials also said the two companies plan to support FICO 10T as implementation expands.
Supporters say VantageScore 4.0 and FICO 10T are more modern and predictive than legacy models. They use machine learning, trended credit data, and broader financial information to assess borrowers.
Unlike older systems that focused mainly on loans and credit cards, these newer models can incorporate payment patterns over time and recognize responsible behavior that may have previously gone unnoticed.
Rent and utility payments could now matter more
One of the biggest changes is that timely rent and utility payments may help some borrowers qualify for a mortgage.
VantageScore considers rental and utility payment history reported to Equifax, Experian, or TransUnion. FICO 10T can also factor in reported rental payment history. That could benefit consumers who consistently pay monthly bills but lack deep traditional credit files.
“If you pay your rent on time, you are more likely to pay your mortgage on time,” Pulte said during a press conference on Wednesday. “For decades, our housing system ignored that simple fact, because your credit score would never count it. That’s nonsense, because credit history should include rental history.”
Why this could help first-time buyers
Younger households and first-time buyers often struggle to qualify because they may have shorter borrowing histories, student debt burdens, or limited use of credit cards.
Talking to Fox News on Wednesday, Turner described the changes as part of the Trump administration’s agenda to make homeownership more affordable for Americans, especially young people.
“Now we are increasing competition, we are increasing innovativeness. This is for creditworthy, trustworthy people,” he said. “We are taking bold steps to open up the credit market for creditworthy people—for Gen Z, millennial first-time homebuyers.”
Pilot rollout is coming first
Federal Housing Finance Agency Director Bill Pulte said Fannie Mae and Freddie Mac are launching a pilot program allowing the use of VantageScore 4.0 exclusively for loans delivered to them, with future support for FICO 10T and a revised pricing grid.
According to the companies, the rollout will begin on a limited basis with approved lenders to ensure systems are ready before a broader nationwide implementation.
Could mortgage costs fall?
Officials and industry supporters argue that more competition in credit scoring could lower costs over time.
If lenders have multiple approved scoring models instead of relying heavily on one dominant provider, pricing for credit pulls and underwriting services could become more competitive. More accurate scoring may also allow some borrowers to receive better rates if their full payment history is recognized.
While the changes may widen access, credit scores will remain a key factor in mortgage approvals and interest rates.
It typically takes at least a 620 credit score to qualify for many conventional mortgages, while the best rates often go to borrowers with significantly higher scores, sometimes 750 or above. Income, debt levels, employment history, down payment size, and savings will also continue to matter.
Why FICO stock fell sharply
Investors reacted quickly to the announcement. Shares of Fair Isaac, better known as FICO, fell more than 13% after the news and have dropped sharply this year.
The decline reflects concern that FICO’s long-held dominance in mortgage lending may weaken as lenders gain access to competing models such as VantageScore 4.0.
The bottom line for homebuyers
For prospective buyers, especially renters with strong payment histories, this policy shift could create new opportunities to qualify for a mortgage in the months ahead.
The biggest impact may not be immediate, since lenders still need time to complete pilot programs and update systems. But over time, the change could reshape how Americans prove they are ready to buy a home.
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14 essential strategies to maximize your Social Security and avoid costly mistakes
Social Security is a vital lifeline for many seniors, providing crucial income support during retirement. With inflation at its highest in four decades, Social Security’s inflation-adjusted benefits offer protection against rising costs.
Rising interest rates have disrupted many retirement portfolios, causing bond fund values to plummet. In this volatile financial landscape, Social Security can stabilize a typical stock-bond retirement portfolio. By implementing smart strategies, retirees can maximize their Social Security benefits and ensure a more secure financial future.
14 Essential Strategies to Maximize Your Social Security and Avoid Costly Mistakes
11 reasons you should claim Social Security early
Deciding when to claim Social Security is often about maximizing your benefit. Financial planners usually advise delaying your claim for as long as possible to secure the highest monthly payment. Your benefit is based on your lifetime earnings, with a full payout available at your full retirement age (FRA), which is currently between 66 and 67 depending on your birth year. Claiming before FRA results in a permanent reduction in your monthly benefit, while waiting beyond FRA leads to a permanent increase. However, the decision isn’t solely about maximizing the monthly check. Personal factors such as health, family circumstances, and financial needs can play a significant role in determining the right time to claim.
11 Reasons You Should Claim Social Security Early
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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