JACKSONVILLE, Fla. — A major shift is coming to the mortgage industry, and it could make homeownership more accessible for first-time buyers.
Fannie Mae and Freddie Mac—two of the country’s largest mortgage backers—will now accept VantageScore as an alternative to the traditional FICO score when evaluating loan applications.
The change could significantly expand credit access for Americans with limited credit history.
Unlike FICO, VantageScore factors in rent payments and other self-reported data, giving consumers a new way to demonstrate financial responsibility.
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“This will be a very impactful model for young borrowers who have good or better credit. That Vantage model is almost certainly going to represent a higher credit score than the FICO model,” said Ben Sykes, a partner at First Coast Mortgage Alliance.
Sykes said his agency has already adopted the new policy and encourages renters—especially younger consumers—to take advantage of the opportunity.
“If you’re renting directly from a landlord, they would have to verify that data. If you’re renting from a large apartment complex, they will verify that data. So it is not as simple as you making a payment and saying I made my payment,” He explained.
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The VantageScore model can also include on-time payments for phone and utility bills. But Sykes cautions that the burden is on consumers to ensure this information is properly reported to credit agencies.
“Because it’s not direct to Vantage. They are often done through third-party services, whether it’s Equifax,” Sykes said, referring to credit bureaus and reporting platforms.
Once verified, the payment data is added to the borrower’s credit report, potentially boosting their credit score and improving loan terms.
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“This should be a net positive for buyers to have higher credit scores, lower fees, lower rates, and lower mortgage insurance,” Sykes said.
However, he also warns that the system can work both ways. Missed payments will also be reported and could negatively impact a borrower’s score.
For renters considering a move into homeownership, this policy update could be a game-changer, especially if they’re already in the habit of paying rent on time and through verifiable means.
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