Oklahoma Mortgage Group - Mike David

Mortgage credit scoring may be entering one of its largest periods of change in decades. The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to expand the availability of VantageScore 4.0 to approved mortgage lenders. At the same time, federal officials are considering changes to the traditional practice of obtaining information from all three national credit bureaus. Those headlines sound dramatic, but buyers need to understand the difference between a policy announcement and complete lender implementation. What is VantageScore 4.0? VantageScore 4.0 is an alternative to the classic FICO models traditionally used in mortgage lending. It evaluates credit information differently and can use trended credit data, which looks at how balances and payments change over time. When information such as rental payments is reported to a credit bureau, the model may also consider that history. This could be helpful for some consumers who responsibly pay rent but have limited t...

The mortgage industry is entering a new credit scoring era. FHFA announced that Fannie Mae, Freddie Mac, and FHA are moving forward with newer credit score models, including VantageScore 4.0 and FICO 10T. VantageScore 4.0 is available immediately for approved lenders, while FICO 10T is expected to follow. Why This Matters For years, mortgage lending has relied heavily on Classic FICO. That model is still approved, but newer models create more competition and may give lenders a better way to evaluate creditworthiness. FHFA says these newer models can consider additional data, including rent payment history. That could be especially important for renters who pay consistently but have limited traditional credit depth. What Could Change Over time, this may help expand the borrower pool. Some buyers who did not score well under older models may be viewed differently under newer credit frameworks. It may also create more competition among credit score providers, which could help reduce credi...