Understanding the Impact of New Credit Scoring Models on Homebuyers

In 2025, there will be big changes in how lenders evaluate homebuyers’ credit, with Fannie Mae and Freddie Mac requiring the use of new scoring systems like FICO Score 10T and VantageScore 4.0. These changes will influence who can buy a home.

These new scoring methods want to be fairer and look at more aspects of someone’s credit compared to the older systems. They look at different kinds of bills people pay, like rent and utilities, not just credit cards and car payments. For example, VantageScore 4.0 lets people include their rent, utilities, and phone bills when calculating their credit score. This helps people who don’t have much debt or who prefer to pay in cash.

These new models mean more people might be able to get loans to buy homes, especially those who don’t have much of a credit history or have different ways of proving they can handle money. With VantageScore 4.0, you only need one month of credit history to get a score, while FICO Score 10T still needs six months.

Overall, these changes could make it easier for more Americans to become homeowners. By looking at different kinds of credit information, lenders can better understand if someone can pay back a loan, which could mean more people can get loans who couldn’t before.