Federal Housing Agencies Adopt New Credit Scoring Models to Expand Mortgage Access

Policy shift introduces updated scoring systems that factor rent and utility payments into loan evaluations.

By yourNEWS Media Newsroom

The Federal Housing Administration will begin using updated credit scoring systems for mortgage underwriting, joining Fannie Mae and Freddie Mac in a move aimed at expanding access to home loans and modernizing borrower evaluation.

According to an April 22 statement from the U.S. Department of Housing and Urban Development, lenders will now be permitted to use VantageScore 4.0 and FICO Score 10T when assessing applicants for FHA-insured mortgages. The change marks a departure from the long-standing reliance on traditional FICO scoring models currently used by most lenders.

HUD said the update is intended to improve affordability and broaden access to mortgage financing by incorporating a wider range of financial behaviors into credit evaluations. Both Fannie Mae and Freddie Mac have begun accepting loans evaluated with VantageScore, while adoption of FICO 10T is expected to follow.

Scott Turner said the updated models allow lenders to account for consistent payments that were previously excluded. “If you pay your rent and utilities on time, your credit score should reflect it,” he said in a public statement, noting that the change could increase opportunities for first-time homebuyers.

The newer scoring systems differ from legacy models by incorporating expanded datasets. VantageScore 4.0 allows evaluation of individuals with limited traditional credit histories, while FICO 10T uses “trended data” to analyze patterns in borrowing and repayment over time rather than relying solely on recent activity. According to Experian, this approach can identify whether credit utilization is increasing or decreasing over a multi-year period.

Officials say the changes are part of implementing the Credit Score Competition Act of 2018, which was enacted under Donald Trump and aimed to introduce more flexibility and competition into credit scoring systems.

Housing agencies said the updated models could provide a more comprehensive picture of borrower creditworthiness by incorporating nontraditional payment histories, including rent and utilities. Jake Williamson stated that the shift could help support broader access to homeownership while maintaining lending standards.

However, some consumer advocates have raised concerns about the inclusion of alternative data. The National Consumer Law Center has noted that negative rental payment histories could adversely affect some borrowers’ credit profiles. In addition, inconsistencies in reporting rental data could lead to incomplete or misleading credit records.

A previous analysis by the Government Accountability Office found that while alternative data may improve credit scores for certain individuals, it is uncertain whether such changes would significantly increase access to lower-cost mortgages for a large number of borrowers.

The policy change comes as part of broader housing initiatives focused on affordability and access. The administration has also taken steps aimed at increasing housing supply and limiting large-scale investment purchases of single-family homes.

Federal officials said the adoption of updated credit scoring models represents an effort to align mortgage underwriting with current financial behaviors, potentially expanding eligibility for borrowers who may not have been fully reflected under older systems.