The Trump administration announced a major overhaul of the credit scoring system used for mortgage loans, 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 change is being framed as an effort to revive the stagnant housing market and reduce barriers to first-time buyers squeezed by high house prices, high mortgage rates and tight credit standards. This also marks a direct challenge to the long-standing dominance of traditional FICO-based mortgage insurance.
Historical change in mortgage loan scoring
The U.S. Department of Housing and Urban Development (HUD) called the announcement 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For decades, lenders have relied heavily on outdated credit score models when deciding who qualifies for a mortgage. Critics have argued that these systems fail to reflect the number of modern consumers who handle money, especially renters and young 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.
FHA plays a critical role in expanding access to homeownership because it insures loans for borrowers who may have lower credit scores or lower down payments. Fannie Mae and Freddie Mac, meanwhile, back nearly 70% of the U.S. mortgage market, making any underwriting changes extremely important to both lenders and buyers.
New models are accepted
Under changes announced by HUD Secretary Scott Turner, FHA will allow 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 sales guidance and will “immediately” begin accepting Vantage-point loans from approved lenders, according to HUD. Officials also said the two companies plan to support FICO 10T as the implementation expands.
Supporters say VantageScore 4.0 and FICO 10T are more modern and predictive than older models. They use machine learning, trend credit data and broader financial information to evaluate borrowers.
Unlike legacy systems that focused primarily on loans and credit cards, these new models can consolidate payment patterns over time and recognize responsible behavior that may have gone unnoticed before.
Rent and utility payments may be more important now
One of the biggest changes is that on-time rent and utility payments can help some borrowers qualify for a mortgage.
VantageScore takes into account rent and utility payment history reported to Equifax, Experian or TransUnion. FICO 10T may also take into account reported rent payment history. This could benefit consumers who consistently pay monthly bills but don’t have traditional credit files.
“If you pay your rent on time, you’re more likely to pay your mortgage on time,” Pulte said at a news conference Wednesday. “For decades, our housing system has ignored this simple fact, because your credit score never takes it into account. This is ridiculous, because credit history should include rental history.”
Why might this help first-time buyers?
Young households and first-time shoppers often have difficulty qualifying due to shorter borrowing histories, student debt burdens or limited credit card use.
Speaking to Fox News on Wednesday, Turner said the changes are part of the Trump administration’s agenda to make hosting more affordable for Americans, especially young people.
“We are now increasing competition, increasing innovation. This is for creditworthy, reliable people,” he said. “We are taking bold steps to open the credit market to people with high creditworthiness: first-time homebuyers, Millennials and Generation Z.”
Pilot application comes first
Federal Housing Finance Agency Director Bill Pulte said Fannie Mae and Freddie Mac have launched a pilot program that allows the use of VantageScore 4.0 for loans made only to them, with future FICO 10T support and a revised pricing table.
According to the companies, deployment will begin on a limited basis to approved lenders to ensure the systems are ready before a broader nationwide rollout.
Could mortgage costs fall?
Officials and industry supporters argue that more competition in credit scoring could lower costs over time.
Pricing for underwriting and underwriting services could become more competitive if lenders had multiple validated scoring models rather than relying heavily on one dominant provider. More accurate scoring may also allow some borrowers to get better rates if their full payment history is recognized.
While the changes could expand access, credit scores will continue to be an important factor in mortgage approvals and interest rates.
While a credit score of at least 620 is generally required to qualify for most conventional mortgages, the best rates are often given to borrowers with significantly higher scores, sometimes scores of 750 or higher. Income, debt levels, employment history, down payment size, and savings will also continue to be important.
Why did FICO shares fall sharply?
Investors reacted quickly to the announcement. Shares of Fair Isaac, known as FICO, fell more than 13% following the news and have fallen sharply this year.
The decline reflects concern that FICO’s long-standing dominance in mortgage lending could weaken as lenders gain access to competing models such as VantageScore 4.0.
The last point for home buyers
For potential buyers, especially renters with strong payment histories, this policy change could create new opportunities to qualify for a mortgage in the coming months.
The biggest impact may not be immediate, as lenders still need time to complete pilot programs and update systems. But over time, this change could reshape the way Americans prove they’re 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 significant income support during retirement. At a time when inflation is at its highest level in four decades, Social Security’s inflation-adjusted benefits provide protection against rising costs.
Rising interest rates have disrupted many retirement portfolios and caused bond fund values to decline. In this volatile financial environment, 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 to claim Social Security early
Deciding when to claim Social Security is often about maximizing your benefits. Financial planners generally recommend delaying your request for as long as possible to secure the highest monthly payment. Your benefit is based on your lifetime earnings, with full payout available at your full retirement age (FRA); this age is currently between 66 and 67 years old, depending on your year of birth. Claiming before FRA will result in a permanent decrease in your monthly earnings, while waiting after FRA will result in a permanent increase. But the decision isn’t just about maximizing the monthly check. Personal factors such as health, family circumstances and financial needs can play an important role in determining the right time to make a claim.
11 Reasons to Apply for Social Security Early
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John Dealbreuin came to the United States from a third world country without knowing anyone and with only $1,000; Guided by an immigrant dream. He reached his retirement number in 12 years.
he started Financial Freedom Countdown helping everyone think differently about financial challenges and live their best life. John lives in the San Francisco Bay Area and enjoys hiking and weight training.
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