The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to approve all lenders to use VantageScore 4.0, ending a rollout limited to 50 mortgage companies.
The directive could accelerate competition with FICO across the conventional mortgage market. But FHFA Director Bill Pulte is already looking beyond competing scores, signaling that the agency may also reduce the number of credit reports lenders must obtain.
“Fannie and Freddie’s initial rollout of VantageScore has been incredibly successful, with 50 lenders delivering loans,” Pulte wrote in a social media post. “So, effective immediately, I’m instructing Fannie and Freddie to approve all lenders to use VantageScore.”
Individual lenders may still need to complete GSE and vendor requirements before delivering loans evaluated with VantageScore 4.0. Fannie Mae’s current guidance directs prospective participants to contact their account teams for program requirements and delivery instructions.
Adoption Moves Beyond Pilot Stage
FHFA previously allowed approved lenders to choose either Classic FICO or VantageScore 4.0 for individual loans sold to Fannie Mae and Freddie Mac.
VantageScore said its model was used as the sole credit score for more than 9% of mortgages securitized by the GSEs between May 1 and Aug. 31. The company did not disclose how much of that volume came from its largest adopters.
Rocket Mortgage and Rocket Pro began using VantageScore 4.0 alongside Classic FICO in May. Other large originators subsequently joined the rollout.
Opening the program to every lender gives smaller and midsized mortgage companies the same scoring choice. It does not require lenders to stop using Classic FICO or guarantee that every company can immediately deliver VantageScore-evaluated loans.
Classic FICO remains approved for GSE loans. FHFA also validated FICO Score 10T in 2022, but the newer model has not yet entered production for loans delivered to Fannie Mae and Freddie Mac.
FICO said it supports Pulte’s effort to foster “a competitive environment that is based on performance, trusted analytics, and outcomes for borrowers, lenders, and investors.”
Pulte Targets The Tri-Merge
FHFA has kept the tri-merge credit-report requirement during the VantageScore rollout. Lenders must generally obtain information from all three nationwide credit bureaus regardless of whether they use Classic FICO or VantageScore 4.0.
That requirement may not last.
Pulte said FHFA is “seriously considering” a bi-merge approach and is studying whether mortgages could be evaluated using a report from only one bureau. He also accused Equifax, Experian, and TransUnion of overcharging consumers.
VantageScore is jointly owned by the three bureaus. That means FHFA is promoting competition between scoring models while separately questioning the prices charged by VantageScore’s owners.
Reducing the number of required credit reports could have a greater direct effect on origination expenses than substituting one score for another because mortgage credit charges include bureau, reseller, and platform fees in addition to the score provider’s price.
Will Savings Reach Borrowers?
The Community Home Lenders of America, which has pushed FHFA to widen lender choice, said the decision could place competitive pressure on credit costs.
“CHLA commends FHFA Director Pulte for his announcement today that VantageScore will be available for all lenders,” said Rob Zimmer, CHLA’s director of external affairs. “This is a decisive action to increase competition and save mortgage borrowers money, in the face of a credit score market in which FICO has too long had a monopoly.”
CHLA estimates that the average credit-report expense associated with closing a conventional mortgage has risen from roughly $50 in 2022 to approximately $540 in 2026. That figure includes repeated credit pulls and charges beyond the foundational score price.
Equifax and TransUnion this year cut the price of VantageScore 4.0 mortgage scores to approximately $1, substantially below the foundational price associated with a FICO mortgage score.
A Deep Future Analytics study estimated that full VantageScore adoption could generate more than $930 million in first-year savings. That projection assumes 100% lender conversion and a significant pricing difference between VantageScore and FICO.
Actual savings will depend on lender adoption and the charges imposed by bureaus, resellers, and technology providers. It also remains unclear how much would reduce borrower fees and how much lenders would retain as lower production costs.
What It Means
VantageScore says its model can score approximately 33 million more U.S. adults than traditional mortgage scoring models, including nearly five million additional consumers it considers mortgage-ready.
The company attributes the broader reach to trended credit information and additional reported payment data. FICO has challenged VantageScore’s performance claims and cited separate research finding FICO Score 10T more predictive of mortgage defaults.
For originators, VantageScore could provide another path for applicants who lack enough recent traditional credit activity to receive a usable Classic FICO score. A score alone, however, does not make a borrower eligible. Applicants must still meet the GSEs’ income, asset, collateral, debt-to-income, and underwriting requirements.
Lenders must also determine how the competing models affect eligibility, pricing, pull-through, and secondary-market execution.
Opening VantageScore to every lender removes a significant barrier to credit-score competition. The larger disruption may come next: changing how many credit reports lenders must buy in the first place.
