Mortgage lenders now have many credit score options. What you should know

There are constant changes regarding credit scores in the home buying process that buyers may want to be aware of.

Mortgage lenders are now allowed to use a credit score called VantageScore 4.0 as part of their underwriting process instead of the “old” FICO score, which was the only score allowed for decades, federal officials announced April 22. At some point in the coming months, another score, the FICO 10T, will also be allowed.

The change applies to loans sold to Fannie Mae and Freddie Mac, government-sponsored entities that are the largest buyers of loans in the secondary market. In addition, the Federal Housing Administration, which guarantees most loans to first-time buyers, will also use these two points soon, Housing and Urban Development Secretary Scott Turner said during a press conference announcing the changes. HUD oversees FHA.

Twenty-one major lenders are part of the first wave to use VantageScore 4.0, said Federal Housing Finance Agency Director Bill Pulte during a press conference. The FHFA oversees Fannie Mae and Freddie Mac. Pulte also said that Freddie Mac has already taken out $10 million in loans approved using VantageScore 4.0.

The importance of the changes to consumers is that these two different credit scores use data points that the old FICO score cannot be considered. Although lenders will still use the old FICO score, they will have a choice in where to use the scores — and new models can help certain consumers qualify for a loan or get a better rate.

Here’s what you need to know.

A notable difference between the old FICO score and the new approved models is the possible inclusion of a buyer’s history of paying rent and utilities.

The idea is that some consumers may pay those debts on time, and their score may benefit from that – especially if they don’t have much on their credit report, such as credit cards or installment loans, for example.

“How can you not get a credit score including a large factor in a tenant’s past payment history?” Pulte said in a press conference. “That’s very predictable.”

However, key points in rental history or utility bills should get that information, and experts say most tenant data doesn’t go to credit bureaus for use in any score.

“Just because you rent an apartment doesn’t mean it’s reported to any credit bureau,” says John Ulzheimer, credit expert and president of The Ulzheimer Group in Atlanta.

Currently, VantageScore models only capture rent or spending data that consumers have opted in to report to the three major credit reporting agencies, Equifax, Experian again TransUnionaccording to a VantageScore spokesperson.

Some property managers use software to provide data to one or more credit bureaus. Employers can also sign up for a recruitment reporting service that will transmit the information, Ulzheimer said. Those services may come with a monthly fee of $10 or more, although some large property managers use such a service and may offer it for free to tenants who want to participate.

The share of consumers whose rent payments are reported to credit reporting agencies increased to 13% last year from 11% in 2024, according to a TransUnion report based on a March 2025 survey of 2,006 adults.

There are approximately 46.4 million households occupied by renters in the US, according to the Federal Reserve Bank of St. Louis.

There is another metric that is used in new models and is often already available in credit bureaus: the so-called trending data.

In simple terms, trending data is based on your credit behavior over time – usually the last 24 months. For example, your credit card company typically reports your balance, minimum monthly payment required, and actual payments made during that period to the credit bureaus, Ulzheimer says.

“That instead of just being a summary of the money left over from last month,” he said.

Although the trending data is already included in consumer credit reports, it was not included in the old FICO score used for credit, Ulzheimer said. This information is important, he said, in determining who is a “merchant” – a credit card user who regularly pays off his balance – and who is a “revolver” – someone who carries a balance from month to month, who can be a risky borrower for lenders.

“They may look similar based on the credit score, but they have a very different risk,” Ulzheimer said.

Because the classic FICO score is based on a summary instead of trending data, some mortgage lenders have been able to deliver their scores quickly before applying.

“It used to be that you pulled your credit report [a couple months] before you apply and try to pay off your credit cards as much as possible,” says Ulzheimer.

Doing so usually means your FICO score will get a boost, and that number is what lenders can see. Now, if a VantageScore 4.0 or FICO 10T is used, some consumers may want to think about their credit score a little further before applying for a loan, Ulzheimer said.

“You’re going to have to do a better job of managing your credit card debt over time, not just a month or two before you apply for a loan,” Ulzeimer says.