Mortgage lenders working with Fannie Mae and Freddie Mac can now choose to use Vantage Score 4.0, while still keeping tri-merge credit checks on borrowers.
“Effective today,” Federal Housing Finance Agency (FHFA) Director William J. Pulte posted on X this morning, “to increase competition to the Credit Score Ecosystem and consistent with President Trump’s landslide mandate to lower costs, Fannie and Freddie will ALLOW lenders to use Vantage 4.0 Score with no current requirement to build new infrastructure (stays Tri Merge).”
The post could signal real disruption in the credit scoring and mortgage data landscape — lenders working with Fannie Mae and Freddie Mac can now use VantageScore 4.0, pulling credit from all three major bureaus.
"VantageScore thanks Director Pulte for his resolute focus on enacting credit score competition as required by the law, and promoting efficiency and affordability for creditworthy Americans," stated Silvio Tavares, president and CEO of VantageScore, in a release. Tavares added that Pulte's decision "will revolutionize the American mortgage market and grant millions of creditworthy Americans the golden opportunity to own their homes."
National Mortgage Professional reported in late April that more lenders are checking borrowers’ credit with VantageScore, which was developed by Experian, TransUnion, and Equifax. Overall, some 41.7 billion VantageScore credit scores were used in 2024, up a sizeable 55% from 26.9 billion in 2023.
Today's announcement from FHFA today came after Pulte said in May that the agency would move forward with plans to change the credit-score requirements for Fannie Mae and Freddie Mac. Pulte has specifically targeted the higher costs of Fair Isaac Corporation (FICO) credit scores, and upon Pulte’s announcement, shares of FICO have fallen more than 10%.
In following up on his first post, Pulte said the move to allow VantageScore will bring "forgotten Americans" back into the fold while reducing homeownership costs.
"We are expanding credit access to millions of forgotten Americans — people who live in rural areas, renters who pay their rent on time every month — and bringing down closing costs," he posted on X, then pinned the post. He also had hinted that cost-saving moves are in the works: "If it helps the American consumer, and is legal, we must do it," Pulte posted Thursday evening, July 3.
He also gave a nod to President Donald J. Trump, calling the VantageScore change "huge."
"My ORDER today (thanks to my boss, POTUS) will allow for Americans to use their RENT to qualify for a mortgage," he wrote on X, referencing VantageScore 4.0's consideration and treatment of a range of payment types in determining creditworthiness. "Credit history will no longer just include credit cards and loans. This is HUGE."
Major Shift For GSEs
VantageScore’s use has been a mix for mortgage lenders. While VantageScore use in mortgage originations surged 166% in 2024, according to the company, that growth “was more than offset” by a pullback in use by the government-sponsored entities (GSEs), Fannie Mae and Freddie Mac.
Pulte’s announcement today could change that. FICO could see a loss of its market exclusivity, since the company has historically dominated the mortgage underwriting process, especially with Fannie Mae and Freddie Mac requiring FICO scores. This shift erodes that exclusive position.
For mortgage lenders, Pulte’s announcement could mean:
- Lower Costs. If VantageScore licensing costs are lower, lenders save on upfront costs associated with pulling credit during loan origination. Cost savings could help boost margins or be passed along to consumers.
- Expanded Borrower Access. VantageScore 4.0 is considered more inclusive, particularly for "thin file" borrowers or those with limited credit history. This move could lead to higher loan approval rates, especially among first-time buyers, minorities, and lower-income applicants. According to VantageScore, up to 5 million more prospective homebuyers could qualify for a home purchase if lenders use the VantageScore service.
- Transition Simplicity. Because the tri-merge infrastructure remains intact, no new tech overhaul is needed. That eliminates a key barrier to adoption and accelerates potential uptake.
- Increased Competition And Innovation. By officially approving an alternative credit model, the FHFA is encouraging broader competition, which may drive innovation in scoring methodologies across the industry. It could also drive price competition between FICO and VantageScore going forward. VantageScore stated in a release that Director Pulte's announcement "ends a decades-long lack of credit score competition in the U.S. mortgage market."
