Credit scoring is undergoing its most significant transformation in decades as mortgage lenders gain access to new models that expand credit access beyond traditional FICO scores. Starting in 2026, approved lenders can now choose between the classic FICO model and VantageScore 4.0 when evaluating mortgage applications for loans sold to Fannie Mae and Freddie Mac, marking the first time in decades that the mortgage market has offered competing credit score models.
The shift comes after the Federal Housing Finance Agency (FHFA) approved two new credit scoring models in October 2022: VantageScore 4.0 and FICO 10T. Both models incorporate alternative data sources—including rent payment history, utility payments, and other financial behaviors—that traditional FICO scores have historically ignored. “These new models take into account additional sources of data, including rent payment history, to more accurately assess credit risk,” according to the FHFA’s April 2026 policy update.
The expansion of approved models addresses a longstanding gap in credit access. VantageScore 4.0 delivers “a materially more inclusive view of creditworthiness, scoring approximately 33 million more consumers than FICO 10T,” according to a May 2026 analysis by VantageScore. Within this broader population, nearly 10 million individuals achieve a VantageScore of 620 or higher, a threshold generally considered creditworthy in mortgage underwriting.
Twenty-one large mortgage lenders are part of the first wave implementing VantageScore 4.0, according to Federal Housing Finance Agency Director Bill Pulte. Freddie Mac has already taken $10 million in loans approved using VantageScore 4.0, demonstrating early adoption. FICO 10T, the second approved alternative model, is expected to publish historical data in Summer 2026 and will be adopted by the Enterprises at a later date.
How the New Models Differ
The new credit scoring models incorporate two key innovations that distinguish them from the classic FICO approach. First, they include “trended data”—a 24-month history of credit behavior rather than a single monthly snapshot. This allows lenders to identify whether borrowers are “transactors” who pay off balances monthly or “revolvers” who carry balances, revealing different risk profiles that a snapshot cannot capture.
Second, the new models can factor in alternative data sources when that information is available. Rent and utility payment histories, if reported to credit bureaus, become part of the scoring calculation. “Just because you’re renting an apartment doesn’t mean it’s being reported to any credit bureau,” cautioned John Ulzheimer, a credit expert and president of The Ulzheimer Group, in a CNBC interview. Currently, only about 13% of renters have their payments reported to credit agencies, according to a TransUnion survey. Consumers can opt into rent-reporting services, though some charge a monthly fee of around $10, while others may be provided free by property managers.
The inclusion of alternative data is intended to help borrowers with thin credit files—those without extensive credit card or loan history—build creditworthiness. The shift reflects a broader recognition that consistent rent and utility payments are highly predictive of creditworthiness, particularly for younger borrowers and those new to formal credit markets.
What Remains Unchanged
Despite the modernization, the fundamentals of credit health remain constant. Payment history still accounts for approximately 35% of credit scores, and maintaining lower balances relative to credit limits remains important. The FHFA’s interim approach allows lenders to choose which model to use on a loan-by-loan basis, meaning some borrowers may still be evaluated using classic FICO while others benefit from the new models.
The new models’ reliance on trended data and historical behavior means borrowers can no longer rely on last-minute credit score improvements before applying for a mortgage. “You’ll have to do a better job of managing your credit card debt over time, not just a month or two before you put in a mortgage application,” Ulzheimer noted, emphasizing the shift toward longer-term credit management.
The transition also reflects the 2018 Credit Score Competition Act, which required the FHFA to establish a process for validating advanced credit score models. Both VantageScore 4.0 and FICO 10T underwent rigorous testing and exceeded required thresholds for accuracy, reliability, and integrity before approval. The International Finance Corporation’s May 2026 report, “Cracking the Credit Code,” highlighted how alternative data and AI are transforming lending for underserved borrowers globally, with evidence suggesting these approaches help expand access to finance for individuals and small businesses previously outside the reach of formal credit systems.
Sources
- Federal Housing Finance Agency (FHFA) — Policy statement on credit score model validation and VantageScore 4.0 implementation, April 22, 2026
- VantageScore Solutions — Analysis demonstrating VantageScore 4.0 outperforms FICO 10T in expanding credit access, May 4, 2026
- CNBC — Article on mortgage lenders’ new credit score options and what homebuyers should know, May 5, 2026
- SELCO Community Credit Union — Educational article on new credit score rules and borrower impact, January 9, 2026
- International Finance Corporation (IFC) — Report on alternative data and AI for financial inclusion, May 7, 2026
