Would-be homebuyers can now include on-time rent, utility and telecom payments as proof of their creditworthiness. 

The Federal Housing Finance Agency will accept credit scores from VantageScore 4.0 as a means of underwriting mortgages sold to Fannie Mae and Freddie Mac, in addition to traditional FICO scores. 

FHFA Director Bill Pulte announced the change on X, writing, “Credit history will no longer just include credit cards and loans. This is HUGE.” 

The move is expected to increase the number of eligible borrowers by about five million by removing the requirement for recent credit activity, as well as the requirement that the borrower’s consumer credit file be at least six months old.  

Further, it allows alternative data sources like rent payments to be included when developing credit scores. 

“These are real-world factors that show how people pay their bills and should count when determining if someone qualifies for a mortgage,” National Association of REALTORS® Executive Vice President and Chief Advocacy Officer Shannon McGahn said. “Expanding the number of acceptable credit scoring models also fosters competition in credit reporting, which will lower costs, increase accuracy and ultimately help more qualified Americans achieve homeownership.” 

The FHFA announcement was not unexpected. The 2018 Credit Score Competition Act established the use of modern credit-scoring models for mortgages that would be sold to Government-Sponsored Enterprises (GSEs) like Fannie and Freddie, and in 2022, FHFA gave the GSEs until the fourth quarter of this year to accept mortgages scored by VantageScore. 

“Under Director Pulte’s leadership, the FHFA’s long-expected decision to accept VantageScore 4.0 will revolutionize the American mortgage market and grant millions of creditworthy Americans the golden opportunity to own their homes,” VantageScore CEO Silvio Tavares said.