The U.S. mortgage industry is undergoing a significant transformation following a landmark announcement from the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) to accept VantageScore 4.0 and FICO Score 10T as valid credit scoring models for mortgage applications. This marks the first major change to mortgage credit requirements in over thirty years, with the previous FICO model in place since 1989. The shift stems from the 2018 Credit Score Competition Act, signed by President Donald Trump, and is now being implemented in 2026 after years of anticipation [1].
A key feature of the new models is the inclusion of rent and utility payments in credit scoring, which is expected to benefit millions of Americans who have historically lacked a traditional credit score. According to credit expert Micah Smith, this change allows 'invisible' Americans—those without credit cards or loans—to potentially qualify for mortgages by leveraging their history of on-time rent and utility payments, provided these are reported to credit bureaus. FHFA Director Bill Pulte highlighted that this update aims to help creditworthy individuals who may not have traditional credit card debt but have consistently paid their bills [1].
However, Smith cautioned that the new scoring models are more rigorous than many realize. While the inclusion of rent and utilities can boost scores, late payments in these categories can also negatively impact creditworthiness. Smith emphasized, 'Reporting cuts both ways. Don't let clients assume this is all upside.' She also warned that large balances on student loans, auto loans, or personal loans can still drag down credit scores and affect mortgage eligibility under the new models. The balance component remains a critical factor, with high balances exerting 'high score pressure' [1].
The announcement has generated mixed reactions among potential borrowers, with Smith noting that many clients are 'freaking out in a good way and a bad way.' She attributed this to widespread confusion and media narratives, underscoring the need for borrowers to understand the nuances of the new system. Smith concluded that the changes are intended to modernize an antiquated system and break FICO's monopoly, not to eliminate FICO altogether [1].
CONCLUSION
The adoption of VantageScore 4.0 and FICO Score 10T is poised to expand mortgage access to millions of Americans by incorporating rent and utility payments into credit scoring. However, experts urge caution, as the new models introduce both opportunities and risks for borrowers. Market participants should closely monitor how these changes impact mortgage eligibility and credit behavior in the coming years.