Fannie Mae and Freddie Mac now accept the VantageScore 4.0 credit score from any lender, opening mortgage eligibility to a scoring model built in part on rent, telecom and utility payment data.
The acceptance follows a Sept. 3 directive from Federal Housing Finance Agency Director Bill Pulte. The change marks the first time a credit score built on alternative data has been available across the broad housing finance system, according to the National Association of Realtors.
Shannon McGahn, NAR’s executive vice president and chief advocacy officer, thanked Pulte, Fannie Mae and Freddie Mac in a statement for what she called their work to “vet and adapt VantageScore 4.0” to GSE systems.
Shannon McGahn
“The implementation of VantageScore marks a major milestone for credit scoring, introducing competition among score providers and the use of alternative data such as telecom and utility bills as well as rent payments,” McGahn said in the statement.
McGahn said the change followed years of testing by FHFA, the GSEs, industry and academia. NAR has pushed for alternative data and credit score competition for years, she said, adding the change “may lead to better access and affordability for some homebuyers.”
Separately, FHFA announced Sept. 10 that Fannie Mae and Freddie Mac will disclose VantageScore 4.0 scores alongside legacy scores on securitized mortgages, effective immediately, according to a statement from VantageScore Executive Vice President Anthony Hutchinson. VantageScore 4.0 was used to securitize about 9 percent of Fannie Mae and Freddie Mac mortgages between May 1 and Aug. 31, according to the company.
VantageScore 4.0 has been eligible for conventional delivery to Fannie Mae and Freddie Mac since April 22, and Pulte’s Sept. 3 directive extended that eligibility to all approved lenders.
