A major shift in mortgage underwriting quietly took effect this summer—one that could open the door for more buyers and reshape how lenders evaluate credit risk. In July, FHFA Director William Pulte announced that Fannie Mae and Freddie Mac will now allow lenders to use VantageScore 4.0 alongside the traditional FICO score when assessing mortgage applications.

The change also preserves the long-standing “tri-merge” credit report requirement, pulling data from all three major bureaus rather than moving to a bi-merge system as previously proposed.

The policy reversal was felt immediately on Wall Street. FICO’s stock slid nearly 9% on the news, while the three credit bureaus—Equifax, Experian, and TransUnion, which jointly own VantageScore—saw investor optimism tick upward. But the impact for the housing industry may be even more significant than the market reaction.

VantageScore 4.0 is designed to be more inclusive, factoring in alternative data such as rent, utilities, and telecom payments. That means borrowers with thinner credit files—often first-time buyers, younger households, or those in rural and underserved markets—could now qualify for financing where they might have been sidelined before.

The National Association of Realtors and the Mortgage Bankers Association praised the move, calling it a long-overdue step toward modernizing mortgage credit standards.‍

For agents and brokers, this development could translate into a gradual but meaningful expansion of the buyer pool. Markets with high renter populations may see an uptick in mortgage-ready clients, while investors who specialize in entry-level or workforce housing could find a new stream of qualified purchasers.

Of course, the transition won’t happen overnight. Lenders will need to adjust systems, retrain underwriting teams, and gain comfort with the new model before adoption is widespread. In the meantime, staying informed about how both FICO and VantageScore evaluate credit—and being prepared to guide clients through either process—will be a quiet but powerful advantage in the months ahead.

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