FHFA Director Bill Pulte has announced that Fannie Mae and Freddie Mac will immediately allow mortgage lenders to use VantageScore 4.0—alongside FICO’s classic scores. He emphasized this move is designed to boost competition, reduce costs, and expand access to homeownership.
Why This Matters for Borrowers
- Lower closing costs: With VantageScore often cheaper for lenders—and savings potentially passed to homebuyers—borrowing costs could be lower at closing.
- More inclusive credit evaluation: VantageScore 4.0 incorporates alternative data like rent, utility, and telecom payments. That makes credit more accessible to “thin-file” applicants—renters, rural residents, or veterans—who may lack traditional credit history.
- Potential to reach more borrowers: Analysts predict up to 5 million additional Americans could now qualify for mortgages, helping close the gap for underserved communities.
A Win for Competition—even if FICO Holds Strong
- Market impact: FICO’s long-running 90% market dominance took a hit—its stock plunged up to 15% on the news.
- Still early days: Many lenders may stick with FICO out of habit or to avoid repurchase risk, but Pulte’s move signals that price and innovation pressure are coming.
- Maintaining tri-merge simplicity: No overhaul is required: lenders will continue pulling tri-merge reports (FICO or VantageScore) from all three credit bureaus—minimizing disruption.
How This Affects HomeSimply Clients
- First-time buyers or renters: Borrowers with reliable on-time rent payments—even if they haven’t built other credit—may now qualify.
- Borrowers in rural or underserved markets: Alternative data can open doors where traditional credit histories fall short.
- Everyone seeking lower costs: Potential savings on credit report fees could shave a few hundred dollars off closing costs.
HomeSimply’s Strategy Forward
- Dual-score readiness: We’ll ensure our operations and loan originators are equipped to pull either FICO or VantageScore, depending on which is more advantageous for each borrower.
- Educating borrowers: We’ll explain how alternative data works and advise clients on how to use their on‑time payments—rent or utilities—to their benefit.
- Monitoring adoption: As more lenders begin embracing VantageScore, we’ll track which programs and investor guidelines favor it, ensuring HomeSimply stays ahead for our clients.
Bottom Line for Borrowers
Thanks to this intiative, borrowers may now benefit from lower costs, greater access, and a credit model that reflects their real-world payment habits. It’s a meaningful step forward in leveling the playing field—and HomeSimply is prepared to guide clients to the best scoring option as the market adapts.
