Fannie Mae and Freddie Mac’s federal regulator continues to prepare the mortgage giants to accept loans from borrowers whose creditworthiness has been evaluated by means other than the FICO Classic score in use for nearly three decades.
But Fannie and Freddie are not yet accepting loans scored using VantageScore 4.0 — a source of some confusion, since Federal Housing Finance Agency Director Bill Pulte tweeted on July 8 that the mortgage giants would allow lenders to use the more inclusive score “effective today.”
Mortgage lenders were caught by surprise this summer by Pulte’s announcement, since the FHFA in January suspended plans put in motion during the Biden administration that would have required lenders to start using both VantageScore 4.0 and the new FICO Score 10 T algorithm by Oct. 1 of this year.
A Fannie Mae spokesperson said in January that adopting the new scoring models “requires a number of important milestones to help ensure a smooth process for lenders and others involved. Based on industry feedback, providing more time will allow for a thoughtful and well-executed implementation.”
VantageScore 4.0 and FICO Score 10 T both consider trended credit data and additional inputs such as rent, utility and telecom payments, which their backers say will help more people qualify for loans. Many mortgage lenders are already using the scoring models to evaluate borrowers for loans not backed by Fannie and Freddie.
But while lenders were provided with historical data in 2024 to help them get ready to use the new VantageScore 4.0 model, they’re still waiting on such data for FICO Score 10 T.
Pulte has said in the past he was “not happy” about price increases levied by the company behind the FICO score algorithm, Fair Isaac, which an industry trade group, Community Home Lenders of America (CHLA), claims total 700 percent over the past three years.
VantageScore is a joint venture launched by the big three credit bureaus — Equifax, Experian, and TransUnion — to compete with Fair Isaac.
But because lenders are still waiting for FICO Score 10 T historical data, Pulte’s push to allow Fannie and Freddie to accept Vantage Score 4.0 would mean it would compete with the older, less inclusive FICO Classic score.
Pulte’s order pitting VantageScore 4.0 against FICO Classic would put Fair Isaac at a competitive disadvantage, “driving it out of the market” and making “the anti-competitive nature of the credit scoring market even worse,” Chi Chi Wu, director of consumer reporting and data advocacy at the National Consumer Law Center, said in a July 28 op-ed.
Before lenders can start using VantageScore 4.0 to submit loans to Fannie Mae and Freddie Mac, the mortgage giants will need to publish loan-level price adjustments (LLPAs) tailored for the new, more inclusive score.
But Fannie and Freddie’s regulator did take a step toward opening up competition in credit scoring this week, according to Pulte. To “ensure two scores can be used and not just one, we eliminated [the] requirement for FICO in the infamous ‘guide,’” Pulte posted Friday on the social media platform X.
That’s an apparent reference to the latest selling guides published by Fannie Mae and Freddie Mac on Wednesday — massive documents that spell out the detailed procedures lenders must follow if they want to do business with the mortgage giants.
Pulte’s tweet — and his announcement in July that Fannie and Freddie were accepting VantageScore 4.0 — have created more than a little confusion.
Realtor.com reported on Wednesday that “mortgage lenders now have the option to use VantageScore 4.0, a more inclusive credit scoring model, alongside the traditional FICO score for loans sold to Fannie Mae and Freddie Mac, which account for the majority of U.S. mortgages.”
HousingWire quoted a statement from CHLA spokesperson Rob Zimmer, stating, “Today’s action by Director Pulte is yet another blow he has struck to start to break up the monopoly FICO has had on credit scoring.”
But Zimmer acknowledged on a phone call with Inman that lenders will not be able to submit loans to Fannie and Freddie scored by VantageScore 4.0 until the mortgage giants publish updated loan-level price adjustments [LLPAs] — something he doesn’t expect to happen until late next year.
“I don’t have any inside knowledge, but if they get it live by August or September [of 2026], that’s very good,” Zimmer said. “Could they get it live sooner than that? Sure, they could. But it’s heavily complex, technical and arcane. But the good news is, it’s absolutely a priority over at FHFA.”
Asked about concerns that allowing VantageScore 4.0 to go head-to-head against FICO Classic would put Fair Isaac at a disadvantage, Zimmer said that “in a perfect world, all of these updated models would be in the marketplace as soon as possible.”
But mortgage lenders have “not been provided access to historic FICO 10 T data, so today, we cannot use 10 T,” Zimmer said. “Our expectation is that VantageScore 4.0 will be in the market first, barring some change on the delivery of 10 years of indexing data.”
Zimmer said lenders are “quite concerned about the price hikes by Fair Isaac over the last several years — every fall of every year, starting back in 2022, they announced substantial increases,” he said. “Their other business channels don’t have the growth rates that the mortgage credit scores do.”
Fair Isaac, Fannie Mae, Freddie Mac and FHFA did not respond to Inman’s requests for comment on plans to publish VantageScore 4.0 LLPAs and provide lenders with access to historical FICO Score 10 T data.
Both Fannie Mae and Freddie Mac‘s selling guides, updated on Nov. 5, say lenders are required to use FICO Classic scores to evaluate borrowers. But Fannie Mae will no longer require a minimum credit score for applications processed by its automated Desktop Underwriter tool.
“Non-credit risk factors” evaluated by Desktop Underwriter in those cases include the borrower’s equity and loan-to-value ratio, liquid reserves, loan purpose, loan term, loan amortization type, occupancy type, debt-to-income ratio, housing expense ratio, property type and variable income.
“Big deal for consumers,” Pulte tweeted. “Small or nothing deal for underwriting.”
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