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There is a shift in credit scoring when purchasing a home that consumers may want to be aware of.
Mortgage lenders are now permitted to use a credit score called VantageScore 4.0 as part of their underwriting process instead of a “classic” FICO score, which has been the only approved score for decades, government officials announced April 22. Another alternative score, FICO 10T, will also be permitted at some point in the coming months.
The change applies to mortgages sold to Fannie Mae and Freddie Mac, government-sponsored companies that are the largest mortgage buyers in the secondary market. In addition, the Federal Housing Administration, which insures many loans for first-time buyers, will soon use these two scores as well, Housing and Urban Development Secretary Scott Turner said during a news conference announcing the changes. HUD oversees the FHA.
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Twenty-one major mortgage lenders are part of the first wave to use VantageScore 4.0, Bill Pulte, director of the Federal Housing Finance Agency, said during the press conference. The FHFA oversees Fannie Mae and Freddie Mac. Pulte also said Freddie Mac has already taken out $10 million in loans approved with VantageScore 4.0.
The significance of the changes for consumers is that these two alternative credit scores use data points that a classic FICO score does not take into account. While lenders may still use the classic FICO score, they have a choice of which scores to use — and the newer models could help some consumers qualify for a mortgage or get a better interest rate.
Here’s what you should know.
Rent and additional costs count – provided they are reported
One notable difference between a classic FICO score and the approved newer models is the possible inclusion of a consumer’s history when paying rent and utilities.
The idea is that some consumers regularly pay their bills on time and that their credit score could benefit as a result – especially if they don’t have much on their credit report, such as credit cards or an installment loan.
“How can you prevent credit from becoming a significant factor in a person’s rental payment history?” Pulte said during the press conference. “It’s very predictive.”
However, a score that takes rental history or utilities into account must retain this information, and experts say most renters’ data is not forwarded to the credit bureaus for use in any score.
“Just because you rent an apartment doesn’t mean it will be reported to a credit reporting agency,” said John Ulzheimer, a credit expert and president of the Ulzheimer Group in Atlanta.
Currently, VantageScore models only capture rental or utility payment data that consumers choose to voluntarily report to the three major credit reporting agencies. Equifax, Experian And TransUnionsaid a spokesperson from VantageScore.
Just because you rent an apartment doesn’t mean it will be reported to a credit reporting agency.
John Ulzheimer
President of the Ulzheimer Group
Some property managers use software to report data to one or more credit reporting agencies. Tenants could also sign up for a rent reporting service that shares the information, Ulzheimer said. These services may require a monthly fee of around $10, although some large property managers use such a service and may make it available for free to tenants who wish to participate.
According to a TransUnion report based on a survey of 2,006 adults in March 2025, the share of consumers whose rent payments are reported to credit bureaus rose to 13% last year from 11% in 2024.
According to the Federal Reserve Bank of St. Louis, there are approximately 46.4 million renter-occupied households in the United States.
Trend data can help or hurt your bottom line
There is another key figure that is used in the new models and is usually already available to the credit reporting agencies: so-called trend data.
In simple terms, trend data is based on your credit behavior over time – typically the last 24 months. For example, your credit card company typically reports your account balance, required minimum monthly payment and actual payments made during that period to the credit bureaus, Ulzheimer said.
“This is not just a snapshot of last month’s balance sheet,” he said.
While trend data is already included in consumer credit reports, it is not factored into the classic FICO score for mortgages, Ulzheimer said. That information is valuable, he said, in determining who is a “transactor” – a credit card user who routinely pays off their balance – and who is a “revolver” – someone who carries a balance from month to month, which can be a riskier borrower for a lender.
“They may look identical based on the credit rating, but they have very different levels of risk,” Ulzheimer said.
Because the classic FICO score is based on a snapshot rather than trend data, some mortgage borrowers were able to improve their score relatively quickly before applying.
“It used to be that you would get your credit report [a couple months] Before you apply, try to pay off your credit cards as much as possible,” Ulzheimer said.
This generally meant that your FICO score would increase, and that was exactly the number lenders would see. Now, if VantageScore 4.0 or FICO 10T is used, some consumers may want to think about their credit well before applying for a mortgage, Ulzheimer said.
“You need to better manage your credit card debt over time, not just a month or two before you apply for a mortgage,” Ulzeimer said.
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