VantageScore or FICO for homebuyers

When it comes to homebuyers‘ credit scores, changes are under way — and there could be more to come.

After decades of allowing lenders to only factor a “classic” score from provider FICO into their decision to extend a loan, Fannie Mae and Freddie Mac — government-sponsored enterprises that purchase mortgages and then bundle and sell them to investors — are now also permitting them to use VantageScore 4.0, a score from credit bureaus Equifax, Experian and TransUnion. The change applies to all mortgages sold to Fannie and Freddie.

This is an expansion of a limited rollout, announced in April, which involved about 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 significance is that VantageScore 4.0 uses data points that a classic FICO score doesn’t consider, such as rent payments — which could help some homebuyers qualify for a mortgage or get a better interest rate on their loan, experts say.

About a third of mortgage denials for primary home purchases with conventional loans in 2025 were due to a lack of credit history, according to Zillow’s analysis of 2025 Home Mortgage Disclosure Act data.

Another newer credit score model, FICO 10T, which uses similar alternative data, is expected to be approved for use in mortgages by FHFA in the coming months. Separately, the Federal Housing Administration will begin insuring mortgages underwritten with VantageScore 4.0 and FICO 10T starting on Jan. 1.

While a bi-merge, as it’s called, potentially could reduce the cost of pulling credit reports — which has risen sharply in the past several years — it would create a new problem, 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.

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

Both brands use similar data to compute your number — including outstanding debt, payment history and other financial tidbits that help predict whether you’ll repay what you borrow. The most familiar versions of both VantageScore and FICO result in a score that falls on a scale of 300 to 850; the higher, the better.

VantageScore 4.0 differs from the classic FICO score in several ways, including by considering rent and utility payments when evaluating a person’s creditworthiness. The idea is that some consumers may consistently pay those bills on time, and their score could benefit from that — especially if they don’t have much else on their credit report, such as credit cards or an installment loan, for instance.

Of course, if you’re late or behind on your rent, your VantageScore 4.0 could suffer.

Nevertheless, for homebuyers with thin credit histories, having an alternative credit score used could mean a greater chance of getting 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 said.

While a potential homebuyer can ask their mortgage broker or lender to check their VantageScore 4.0 as well as their classic FICO score, it may not be easy for consumers to check those scores on their own ahead of time.

FICO offers a subscription service for $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 if you have an account through Synchrony Bank, a retail credit card provider. Zillow’s rental application program, which costs $35, also offers access.

The share of consumers whose rent payments are reported to credit reporting agencies rose to 13% last year from 11% in 2024, according to a TransUnion report that was based on a survey of 2,006 adults in March 2025.

There are about 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 feed data to one or more credit bureaus. Renters may also sign up for a rent-reporting service that will pass the information along, Ulzheimer said. Those services may come with a monthly fee of about $10, although some large property managers may offer it for free to renters who want to participate.

This is based on a person’s credit behavior over time — usually the last 24 months. For instance, a credit card company typically reports to the credit-reporting companies the balance, the minimum monthly payment required and the actual payments made over that stretch of time, Ulzheimer said.

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

This information is valuable to lenders, Ulzheimer said, in determining who is a “transactor” — a credit card user who routinely pays off their balance — and who is a “revolver” — someone who carries a balance from month to month, which can be a riskier borrower for a lender.

For consumers, this means managing credit card debt over time will be important if they plan to apply for a mortgage, he said.