The End of a 20-Year Monopoly on the Credit Score

For decades, Americans applying for a conventional mortgage faced a system built around one dominant credit-scoring model. Whether they knew it or not, borrowers seeking loans that could be sold to Fannie Mae or Freddie Mac were largely being judged using Classic FICO.

That long-running arrangement is now changing.

Federal housing regulators have opened the mortgage market to newer credit-scoring models, giving lenders more options for evaluating borrowers and potentially giving some consumers a better chance to qualify for a home loan.

The Federal Housing Finance Agency approved FICO 10T and VantageScore 4.0 for use by Fannie Mae and Freddie Mac in October 2022 after reviewing the models for accuracy, reliability and integrity. The transition has taken several years as regulators, mortgage companies, credit bureaus, and other parts of the lending industry prepared for the change.

A major step came April 22, 2026, when federal officials announced that Fannie Mae and Freddie Mac would begin accepting loans using VantageScore 4.0. The Federal Housing Administration also announced that both VantageScore 4.0 and FICO 10T would become eligible models for FHA-insured mortgage underwriting.

The change does not mean FICO is disappearing.

Classic FICO remains part of the mortgage system, and lenders can continue using it. Instead, the shift introduces something largely absent from the mortgage credit-score business: competition.

For borrowers, the difference could matter.

Traditional credit scores rely heavily on familiar forms of borrowing, such as credit cards, auto loans, and other accounts reported to the major credit bureaus. That can create a problem for people who pay their bills faithfully but do not use much conventional credit.

For example, someone might have rented the same home for years, paid every month on time, kept the electricity and phone turned on, and avoided unnecessary debt. Yet that person may still have a limited credit history.

Newer scoring systems are designed to examine a broader picture when the information is available.

VantageScore 4.0, for example, can use rental, utility, and telecommunications payment information when those accounts are reported to the credit bureaus. It also uses what is known as “trended” credit data, examining patterns in a consumer’s behavior over time rather than relying solely on a snapshot of the person’s accounts at one moment.

That distinction can reveal something a traditional score might miss.

Consider two borrowers who each owe $3,000 on a credit card today. One has steadily reduced the balance from $8,000 during the past year. The other has increased the balance from $500.

A snapshot shows two $3,000 balances. Trended information can show that the borrowers arrived there in very different ways.

The newer system can also produce scores for consumers who have historically been difficult to score because they have limited conventional credit histories.

VantageScore says its 4.0 model can score approximately 33 million more U.S. adults than Classic FICO or FICO 10T, although that figure comes from the company itself rather than an independent government estimate. The company says that group includes millions of consumers who could potentially qualify for mortgages.

None of this means paying rent on time will automatically raise someone’s credit score.

There is an important catch: the information has to reach the credit bureaus.

Many landlords, particularly small independent landlords, do not routinely report tenants’ monthly payments. The same issue can apply to other recurring bills. If the payment history never appears in the consumer’s credit file, a scoring model cannot use it simply because the payments occurred.

The changes also do not guarantee that a borrower rejected under one scoring model will be approved under another. Credit scores are only one part of mortgage underwriting. Income, debt, employment, down payment, property value, and other factors can affect whether a loan is approved and what terms are offered.

And the transition remains a work in progress.

Fannie Mae and Freddie Mac began accepting VantageScore 4.0 in 2026 while maintaining the existing three-bureau, or “tri-merge,” credit-reporting system. That means the mortgage industry has not simply flipped a switch from one scoring system to another. Different lenders may use different approved models as the market adjusts.

FHA’s transition is also continuing. Although federal officials announced in April that FICO 10T and VantageScore 4.0 would become eligible for FHA mortgages, FHA later set Jan. 1, 2027, as the implementation date for adding the models to its underwriting system alongside Classic FICO.

The competition is already showing.

In September, VantageScore reported that its model had been used as the sole credit score on more than 9% of mortgages securitized by Fannie Mae and Freddie Mac since May 1. VantageScore released the figure, which reflects the company’s own accounting of adoption.

The companies behind the competing scores also disagree over which model performs better. VantageScore has published research arguing that its model expands access and provides better predictions of borrower risk, while FICO has released its own analysis arguing that FICO 10T is more predictive. Those competing claims will likely face increasing scrutiny as lenders gain more experience with both systems.

For consumers, however, the larger change is simpler.

For years, the credit score used in much of the mortgage market was essentially predetermined. A borrower could shop among lenders for interest rates, fees, and service, but the underlying scoring system used for loans destined for Fannie Mae and Freddie Mac offered little choice.

That is beginning to change.

A borrower with a long record of paying obligations on time but a thin traditional credit file may now be viewed differently depending on the lender and scoring model being used. That makes it increasingly worthwhile for prospective homebuyers to ask a question that few borrowers had reason to ask before:

Which credit score model are you using?

One factual adjustment I made from the source: FHA approved the newer models in April 2026, but its current guidance says implementation alongside Classic FICO begins Jan. 1, 2027. That distinction keeps the story accurate as of October 2026. HUD