Big change coming to mortgage credit reports.
Big Change Coming to Mortgage Credit Scores: Fannie Mae and Freddie Mac to Accept VantageScore 4.0
What Consumers Need to Know About Credit Score Models and Mortgage Lending
Fannie Mae and Freddie Mac—the government-backed mortgage giants that help keep the U.S. housing market stable—have announced that they will soon begin accepting a new credit scoring model: VantageScore 4.0. This change marks a major shift in how creditworthiness is evaluated for homebuyers seeking conventional loans.
What’s Changing?
Currently, most mortgage lenders rely on versions of the FICO score—specifically, older versions like FICO 2, 4, and 5—depending on which of the three major credit bureaus (Equifax, Experian, TransUnion) is used. These versions have been the industry standard for years, especially for loans sold to Fannie Mae and Freddie Mac.
With this update, lenders will also be able to use VantageScore 4.0, a more modern scoring model developed by the three credit bureaus together. This model incorporates more recent data science and considers a broader range of credit behaviors, especially for consumers with limited credit history.
FICO vs. VantageScore: What's the Difference?
Though both FICO and VantageScore models range from 300 to 850, the way they calculate scores is different:
FICO has different versions for different types of lending. For example, a FICO score used for a mortgage is typically lower than one used for an auto loan or credit card. This is because mortgage lenders tend to use older, more conservative versions of the FICO model.
VantageScore 4.0, on the other hand, uses more recent data and was designed to be more predictive and inclusive. It can score consumers with shorter credit histories and takes into account things like trend data—how your credit usage changes over time—not just static information.
Why This Change Matters to You
If you’ve ever checked your credit score through your bank or a free app, there’s a good chance you were looking at a VantageScore—not a FICO score. Many consumers are surprised (and sometimes frustrated) when they apply for a mortgage and find out their “official” mortgage credit score is much lower than the score they saw online.
This mismatch can lead to confusion between borrowers and mortgage lenders.
By allowing the use of VantageScore 4.0, Fannie Mae and Freddie Mac are helping to close that gap. This move could make the mortgage process more transparent and accessible, especially for first-time buyers or those with limited credit history who might not have a FICO score high enough to qualify under the current system.
What You Can Do
Ask your lender which credit scoring model they are using when you apply.
Don’t be alarmed if your mortgage credit score is lower than the one you see on your banking app—this is normal.
Focus on the fundamentals: paying on time, keeping credit card balances low, and limiting new credit inquiries will help improve any score—FICO or VantageScore.
Final Thought
The move to include VantageScore 4.0 in mortgage underwriting is part of a broader effort to modernize credit evaluation and increase homeownership opportunities. While it won’t replace the FICO model overnight, it adds a new option that could benefit millions of consumers across the country.
