September 18, 2025

Two months have passed since the Federal Housing Finance Agency (“FHFA”) authorized lenders to use VantageScore 4.0 as an approved credit model for mortgages sold to government-sponsored enterprises (“GSEs”) Fannie Mae and Freddie Mac. VantageScore 4.0, developed by the three major credit bureaus, uses trended data such as payment patterns over time and incorporates nontraditional information like rent, utility, and telecom records. This design allows the model to generate scores for millions of consumers with thin or limited credit histories. By contrast, the Classic FICO models long used by the GSEs rely more heavily on traditional credit accounts such as credit cards, auto loans, and mortgages, which often exclude households without established credit.

The July 8, 2025, policy change was projected to expand mortgage eligibility to millions of consumers who fall outside Classic FICO’s reach. Private mortgage insurers quickly signaled readiness to underwrite loans scored with VantageScore. FICO’s stock also declined after the FHFA announcement. However, while VantageScore 4.0 introduces long-awaited competition into mortgage credit scoring, uneven implementation appears to have slowed immediate adoption across the market.

Despite FHFA approval, Fannie Mae and Freddie Mac have not yet updated their Selling Guides. For context, a “Selling Guide” is the set of official requirements issued by Fannie Mae and Freddie Mac that lenders must follow when originating and delivering loans for purchase by the GSEs. Thus, most lenders continue to originate loans using Classic FICO until technical and compliance protocols are finalized. Analysts from the Urban Institute and National Mortgage Professional caution that widespread adoption will require updates to underwriting systems, regulatory oversight, and securitization standards before VantageScore 4.0 can function at scale. The result is a market in transition; new scoring competition is officially recognized but practical use still evolving. How quickly the mortgage ecosystem adapts will likely determine whether VantageScore 4.0 delivers on its promise or remains stalled by barriers.