Credit Scoring Is Evolving — What Homebuyers Need to Know Now

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The credit scoring landscape for homebuyers is shifting — and more changes may be on the horizon.

For decades, lenders have relied exclusively on a “classic” credit score from FICO when deciding whether to extend a mortgage. Now, however, government-sponsored enterprises Fannie Mae and Freddie Mac — which purchase mortgages and package them for sale to investors — are also permitting lenders to use VantageScore 4.0, a scoring model developed by credit bureaus Equifax, Experian, and TransUnion. This change applies to all mortgages sold to Fannie and Freddie.

This expansion follows a limited rollout announced in April, involving roughly 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 key difference is that VantageScore 4.0 incorporates data points that a classic FICO score ignores — such as rent payments — which could help some homebuyers qualify for a mortgage or secure a better interest rate, according to experts.

Approximately one-third of mortgage denials for primary home purchases with conventional loans in 2025 were attributed to insufficient credit history, based on Zillow’s analysis of 2025 Home Mortgage Disclosure Act data.

A second scoring model, FICO 10T, which similarly draws on alternative data, is expected to receive approval for use in mortgages by the FHFA in the near future. Separately, the Federal Housing Administration will begin insuring mortgages underwritten with VantageScore 4.0 and FICO 10T starting Jan. 1.

FHFA May Ease Credit Reporting Requirements

On his Sept. 3 X post, Pulte also disclosed that the FHFA is “seriously considering” reducing the number of credit reports and scores lenders need to evaluate a potential homebuyer to just two. The following day, in a separate post, he said the agency is “also studying” the possibility of using a single credit report in the mortgage application process. The agency did not respond to CNBC’s request for further comment.

Currently, lenders are required to perform what is known as a tri-merge, pulling data about a mortgage applicant from all three major credit bureaus — Equifax, Experian, and TransUnion. Because each bureau reports different credit scores, lenders typically use the middle score in their decision-making.

A bi-merge could potentially lower the cost of pulling credit reports — which has risen sharply in recent years — but it introduces a new risk, 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 and Utility Data May Help Some Borrowers

VantageScore is a joint venture owned by Equifax, Experian, and TransUnion. It was launched in 2006 as a competitor to FICO, which has been in use since 1989.

Both models rely on similar data to calculate a score — including outstanding debt, payment history, and other financial indicators that help predict a borrower’s likelihood of repaying loans. The most common versions of both VantageScore and FICO produce scores on a scale of 300 to 850, with higher scores being more favorable.

VantageScore 4.0 sets itself apart from the classic FICO score in several respects, most notably by factoring in rent and utility payments when assessing creditworthiness. The premise is that some consumers pay these bills consistently on time, and their scores could reflect that responsibility — particularly if they lack substantial credit history, such as credit cards or installment loans.

Of course, missed or late rent payments could have the opposite effect, lowering a borrower’s VantageScore 4.0.

Not all credit reports are the same, and [the lender] may miss something by not pulling all three.

John Ulzheimer

President of The Ulzheimer Group

Still, for homebuyers with limited credit histories, the availability of an alternative scoring model could improve their chances of securing more favorable mortgage terms.

“I do think it’s going to be a benefit to buyers in terms of not just being able to be qualified, but also what interest rate bucket they fall in,” said Stephen Rinaldi, president and founder of the Rinaldi Group, a mortgage broker based near Philadelphia. “Sometimes the VantageScore is higher and sometimes lower [than FICO], but having two options as opposed to one option, there’s more likelihood of approval,” Rinaldi added.

While a prospective buyer can ask their mortgage broker or lender to check both their VantageScore 4.0 and classic FICO score, it may not be straightforward for consumers to access these scores independently ahead of time.

FICO offers a subscription service at $29.95 or $39.95 per month, both of which include classic FICO scores as well as FICO 10T. VantageScore 4.0 is available for free through an account with Synchrony Bank, a retail credit card provider. Zillow’s rental application program, priced at $35, also provides access.

Most Rental Payments Go Unreported

Although VantageScore 4.0 accounts for rental history, the vast majority of that data is never transmitted to credit companies for use in any scoring model.

The share of consumers whose rent payments are reported to credit bureaus increased to 13% last year, up from 11% in 2024, according to a TransUnion report based on a survey of 2,006 adults conducted in March 2025.

There are approximately 46.8 million renter-occupied households in the U.S., according to the Federal Reserve Bank of St. Louis.

Some property managers use software to share data directly with one or more credit bureaus. Renters can also enroll in rent-reporting services that forward the information on their behalf, Ulzheimer said. These services typically carry a monthly fee of around $10, though some large property managers may offer the service at no cost to participating renters.

‘Trended Data’ Can Help or Hurt Your Score

Another metric factored into VantageScore 4.0 — and already available to credit-reporting companies — is so-called trended data.

This metric is based on a person’s credit behavior over time, typically the previous 24 months. For example, a credit card issuer reports to the bureaus the outstanding balance, the minimum monthly payment, and the actual payments made over that period, Ulzheimer explained.

While trended data is already included in consumer credit reports, it has not been factored into the classic FICO score used in mortgage lending.

This information is valuable to lenders, Ulzheimer said, in distinguishing between “transactors” — cardholders who routinely pay off their full balance — and “revolvers” — those who carry a balance month to month, a profile that lenders view as riskier.

For consumers, this underscores the importance of managing credit card debt responsibly over time if you plan to apply for a mortgage.

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