Millions of ‘Credit Invisible’ Americans Could Soon Qualify for Mortgages Under Major Fannie Mae and Freddie Mac Rule Change

Fannie Mae and Freddie Mac Expand Credit Scoring Standards

Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that underpin much of the U.S. mortgage market, finalized a major underwriting shift last month by allowing lenders to use VantageScore credit models alongside — or in some cases instead of — traditional FICO scores.

The announcement was championed by Federal Housing Finance Agency Director William Pulte, who oversees both mortgage giants.

The updated scoring methodology incorporates “trended data,” including on-time rental and utility payments reported to credit bureaus. Historically, late rent payments could negatively impact consumers, while positive rental payment histories often went unrecognized in traditional mortgage underwriting.

Pulte called that imbalance “nonsense” and framed the policy change as a long-overdue modernization of consumer credit assessment.

The decision could reshape how lenders evaluate borrower risk nationwide.

Why Rental Payment History Matters

For decades, millions of Americans have consistently paid rent on time while receiving little to no credit score benefit for doing so.

Under the new framework, those payment histories may finally help borrowers qualify for mortgages.

According to VantageScore Solutions:

• Approximately 7.7 million Americans could see their credit scores rise above 620

• A 620 credit score is a key threshold for many conforming mortgage programs

• Younger consumers could see average score increases of 67 points

• Some consumers may experience increases approaching 100 points

The impact could be especially meaningful for:

• Gig economy workers

• Self-employed borrowers

• Freelancers

• Immigrants

• Young adults with limited credit history

• “Credit invisible” consumers with little traditional borrowing history

Jake Krimmel, senior economist at Realtor.com, said the change addresses long-standing weaknesses in the traditional underwriting system.

“They are probably qualified as a whole, but not on paper under the current rigid, outdated system,” Krimmel said.

A Potential $777 Billion Mortgage Opportunity

The financial implications could be enormous.

VantageScore estimates the updated scoring system could create:

The company says incorporating rental payment history not only expands access but also improves risk modeling.

Supporters argue that consistent rent payments are one of the strongest real-world indicators of a borrower’s ability to manage monthly housing obligations.

Mortgage Lenders Begin Adopting the New Models

Several major lenders have already started implementing the updated scoring systems.

Pennsylvania-based Newrez originated the first $10 million in mortgages using the enhanced data models. Company executives said the rollout validated the scalability of the approach.

Bob Johnson, head of originations at Newrez, said the process integrates smoothly into existing underwriting systems while providing a more complete financial picture of borrowers.

“Consistent on-time payment behavior across a wider range of obligations can now show up in a credit score in ways it often did not under the legacy models,” Johnson said.

Meanwhile, Michigan-based United Wholesale Mortgage announced it would begin accepting both FICO and VantageScore models.

Department of Housing and Urban Development Secretary Scott Turner also indicated FHA-related adoption could follow soon.

Industry Groups Applaud the Modernization

The policy shift received support from major housing and mortgage organizations, including:

• Mortgage Bankers Association

• National Association of Realtors

Supporters argue that the traditional credit system often disadvantages responsible renters while favoring borrowers with larger existing credit footprints.

The updated methodology aligns underwriting more closely with real-world financial behavior.

Several states have already pushed rent-reporting initiatives independently, including:

• California

• Colorado

• New York

Nine additional states have reportedly considered similar legislation.

Risks and Concerns Remain

Despite optimism surrounding expanded access, economists warn the policy is not without risk.

Krimmel noted that FHA delinquencies have already been increasing, raising concerns about broader credit expansion during uncertain economic conditions.

Potential concerns include:

• Rising housing costs

• Elevated mortgage rates

• Economic slowdown risks

• Labor market instability

• Higher debt burdens among younger consumers

Critics caution that expanding eligibility alone cannot solve the larger affordability crisis driven by limited housing inventory and elevated borrowing costs.

Krimmel summarized the concern bluntly:

“Policies expanding the credit pool are only as sound as the labor market supporting it.”

What This Means for Homebuyers

For consumers, the change could create new opportunities to qualify for financing previously out of reach.

Borrowers who consistently pay rent and utilities on time may soon see measurable improvements in their mortgage eligibility — even if they lack extensive credit card or loan histories.

Potential benefits include:

• Easier qualification for conventional loans

• Lower reliance on FHA financing

• Expanded access for first-time homebuyers

• More accurate borrower risk assessments

• Increased competition among credit scoring providers

However, experts still advise prospective buyers to:

1. Monitor their credit reports regularly

2. Ensure rental payments are being reported

3. Maintain low debt-to-income ratios

4. Build emergency savings

5. Compare lender underwriting requirements carefully

The Bigger Picture for the Housing Market

The modernization of mortgage credit scoring arrives at a critical moment for the U.S. housing market.

Affordability challenges remain severe, particularly for younger Americans facing:

• High home prices

• Elevated mortgage rates

• Tight inventory

• Student debt burdens

• Wage growth concerns

While the new scoring framework may expand access to financing, it does not directly address supply shortages or affordability pressures.

Still, the move represents a potentially historic shift toward more inclusive mortgage underwriting.

If widely adopted, the change could permanently reshape how Americans establish mortgage creditworthiness.

Frequently Asked Questions

What changed with Fannie Mae and Freddie Mac credit scoring?

Fannie Mae and Freddie Mac now allow lenders to use VantageScore credit models that include rental payment history when evaluating mortgage borrowers.

How many Americans could benefit?

VantageScore estimates approximately 7.7 million Americans could improve their credit scores enough to potentially qualify for conventional mortgages.

What is considered “credit invisible”?

“Credit invisible” consumers have little or no traditional credit history despite often paying rent and bills consistently.

Will rent payments now help mortgage approval?

Yes. Positive rental payment history may now contribute to higher credit scores under newer scoring models.

Which borrowers benefit the most?

Likely beneficiaries include renters, freelancers, gig workers, immigrants, younger consumers, and borrowers with thin credit files.

Does this reduce mortgage lending risk?

Supporters say the updated models improve risk prediction and can identify more high-risk borrowers than older systems.

Bottom Line

The inclusion of rental payment history in mortgage credit scoring could become one of the most consequential housing finance reforms in years.

For millions of Americans who have responsibly paid rent but struggled to establish traditional credit, the change may finally open the door to homeownership.

Whether the shift ultimately improves affordability and long-term market stability will depend heavily on broader economic conditions, housing supply, and how lenders implement the updated standards.

But one thing is increasingly clear: the mortgage industry is moving toward a more modern definition of creditworthiness.

Sources

• Realtor.com

• Federal Housing Finance Agency

• Fannie Mae

• Freddie Mac

• VantageScore Solutions

• Mortgage Bankers Association

• National Association of Realtors

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Consumers interested in qualifying under updated credit scoring guidelines should speak directly with a licensed mortgage professional to explore eligibility options and loan programs.