FHFA Orders Fannie Mae, Freddie Mac to Open VantageScore 4.0 to All Lenders

FHFA Orders Fannie Mae, Freddie Mac to Open VantageScore 4.0 to All Lenders

Federal housing regulators are widening one of the biggest changes to mortgage credit scoring in decades, directing Fannie Mae and Freddie Mac to approve all lenders to use VantageScore 4.0 for eligible loans sold to the government-sponsored enterprises.

Federal Housing Finance Agency Director Bill Pulte announced the directive Sept. 3, saying Fannie Mae and Freddie Mac’s initial rollout had reached 50 lenders and that the enterprises should approve all lenders to use VantageScore “effective immediately.”

The move significantly expands an initiative that began in April with a limited group of approved lenders. It also increases direct competition with Classic FICO, the credit scoring model that has dominated conventional mortgage lending for decades.

But lenders should distinguish FHFA’s immediate approval directive from operational readiness.

As of Sept. 9, Fannie Mae and Freddie Mac’s public credit-score implementation pages still described VantageScore 4.0 as being available through a limited rollout and instructed nonparticipating lenders to continue using Classic FICO until they receive approval or the model becomes broadly available.

That means lenders interested in switching models may still need updated GSE instructions, system changes or account-level approval before delivering VantageScore-scored loans in practice.

What changed

Until this year, lenders generally relied on Classic FICO scores when originating loans intended for sale to Fannie Mae or Freddie Mac.

FHFA approved VantageScore 4.0 and FICO Score 10T in 2022 as modern alternatives, but implementation took several years because the change affects underwriting systems, credit reporting, mortgage insurance, pricing, securities disclosures and other parts of the secondary mortgage market.

In April 2026, FHFA moved the process forward by allowing lenders participating in an initial rollout to choose between Classic FICO and VantageScore 4.0. The agency kept existing credit-report requirements largely intact during the interim phase to reduce implementation complexity.

Fannie Mae subsequently said approved participants could use VantageScore 4.0 from each of the three nationwide credit bureaus through a tri-merge credit report for Desktop Underwriter casefiles and loan delivery. Freddie Mac implemented a similar framework.

Pulte’s latest directive removes the limited-lender policy barrier and tells the GSEs to approve the broader lender base.

“Fannie and Freddie’s initial rollout of VantageScore has been incredibly successful, with 50 LENDERS DELIVERING LOANS,” Pulte wrote, according to Reuters. “So, EFFECTIVE IMMEDIATELY, I’m instructing Fannie and Freddie to approve ALL lenders to use VantageScore.”

What it means for mortgage lenders

For lenders selling conventional loans to Fannie Mae and Freddie Mac, the decision creates a potentially meaningful alternative to Classic FICO.

VantageScore 4.0 uses trended credit information, which looks at how certain credit balances and payment behavior change over time rather than relying only on a snapshot. FHFA has also said newer credit models can incorporate additional information such as rental payment history and were approved after testing for accuracy, reliability and integrity.

The practical benefit for lenders will depend on several factors, including credit-report pricing, technology integration, investor requirements, mortgage insurance treatment and how borrowers score under competing models.

VantageScore said Sept. 4 that its model accounted for more than 9% of mortgages securitized by Fannie Mae and Freddie Mac from May 1 through Aug. 31, despite the initial rollout being restricted to a limited group of lenders. The company also estimates broader mortgage adoption could produce nearly $1 billion in annual cost savings across the market. Those adoption and savings figures are VantageScore estimates, not FHFA projections.

Borrowers could receive different scores

The expansion does not mean every borrower will suddenly receive a higher score, qualify for a mortgage or obtain a lower interest rate.

Different credit scoring models can evaluate the same underlying borrower information differently. A consumer whose VantageScore 4.0 number differs from a Classic FICO score therefore should not assume the difference will automatically translate into better mortgage terms.

Loan approval and pricing also depend on factors beyond a credit score, including income, debts, down payment, loan-to-value ratio, property characteristics and the lender’s underwriting requirements.

The significance of the change is choice: lenders that can operationalize VantageScore 4.0 are no longer supposed to be excluded simply because they were outside the original pilot group.

FICO remains in the mortgage market

The directive does not eliminate FICO.

Classic FICO remains an FHFA-approved model during the interim transition, and lenders may continue using it for loans sold to Fannie Mae and Freddie Mac.

FHFA has also approved the newer FICO Score 10T model. Fannie Mae and Freddie Mac released more than a decade of historical FICO 10T data in July so lenders, investors and other market participants could analyze its performance, but the GSEs say FICO 10T will become available for loan delivery at a later date.

FICO has argued that its newer model offers stronger mortgage-risk prediction. In May, the company highlighted a Milliman analysis of nearly 20 million mortgages that found FICO Score 10T outperformed VantageScore 4.0 across several measures of predictive performance.

The competing claims underscore that the mortgage market is moving toward competition between scoring systems rather than replacing one universal score with another.

Wall Street reacts to new credit-score competition

Financial markets reacted sharply to Pulte’s announcement.

FICO shares plunged 20% in early trading Sept. 4, according to Reuters. Equifax fell 8%, TransUnion declined 9% and Experian dropped 4.6% after Pulte separately criticized the three credit bureaus over consumer costs and said FHFA was considering additional changes to credit reporting.

VantageScore is jointly owned by Equifax, Experian and TransUnion.

Pulte also said FHFA is seriously considering moving toward a “bi-merge” system, which would rely on reports from two credit bureaus rather than all three, while studying other approaches to reduce credit-report costs. Current GSE guidance still calls for tri-merge reporting during the VantageScore interim phase.

What lenders should watch next

The most important next step is implementation guidance from Fannie Mae and Freddie Mac.

Their public webpages had not yet been updated as of Sept. 9 to reflect Pulte’s new all-lender directive and continued to reference the previous limited-rollout structure.

Updated Selling Guide language, delivery instructions and technology guidance should clarify how quickly lenders outside the original group can begin originating and delivering loans using VantageScore 4.0.

The broader direction, however, is clear: the conventional mortgage market is moving away from reliance on a single credit scoring model. With FHFA now pushing Fannie Mae and Freddie Mac to make VantageScore available to every lender, competition over mortgage credit scores is moving from a controlled pilot into the mainstream.