Fannie and Freddie no longer require FICO. Will it help you get a mortgage?

USA Today

11-07-2025

A regulator's decision to allow a big change to the way mortgages are underwritten is meeting a mixed reception from housing and finance professionals.
'Effective today, to increase competition to the Credit Score Ecosystem and consistent with President Trump's landslide mandate to lower costs, Fannie and Freddie will ALLOW lenders to use Vantage 4.0 Score,' Bill Pulte, the head of the Federal Housing Finance Agency (FHFA), tweeted on July 8.
FHFA oversees Fannie Mae and Freddie Mac, the two giant government-sponsored enterprises that guarantee nearly half of all U.S. mortgage debt. Fannie and Freddie buy loans from banks and other financial institutions, so when they change their processes, it matters to lenders around the country, and the borrowers they serve.
In this case, Pulte was referring to VantageScore, a company that offers credit scores – numerical representations of how likely a borrower is to repay a loan. Lenders who offer mortgages with the intention of selling them to Fannie or Freddie now have the option to use either VantageScore or to continue to use FICO, a competitor, to assess a borrower.
'FHFA's announcement to allow lenders to have a choice of credit score models to use when delivering loans to Fannie Mae and Freddie Mac could help to accomplish the goals of added competition in the credit score space and reduced consumer costs, if implemented correctly,' said the Mortgage Bankers Association, an industry group representing lenders, in a statement.
'We need more competition among credit bureaus and an end to monopolistic practices to lower prices and improve accuracy," Sharon Cornelissen, director of housing for the progressive Consumer Federation of America, told USA TODAY, in an email. "Director Pulte's action is a step in the right direction, and we hope he continues to work on reducing closing costs and broadening mortgage access for consumers.'
But some consumer advocates believe the introduction of VantageScore into the mortgage space will actually decrease competition by consolidating industry share more firmly in the hands of TransUnion, Experian and Equifax, the three credit bureaus, which own the company.
'The big three credit bureaus are basically a functional monopoly,' said Chi Chi Wu, director of consumer reporting and data advocacy at the National Consumer Law Center. 'If you want a mortgage, you have to pull all three reports. You have no choice. They created VantageScore to try to drive FICO out of the market because they want the whole market. FICO is the only independent actor.'
Ingmar Goldson, a Maryland-based consumer lawyer, echoed those beliefs. "Given that VantageScore is owned by the three major credit bureaus, I remain skeptical of any claims—whether from Fannie, Freddie, or the bureaus themselves—that this shift will truly benefit consumers in the long run," he told USA TODAY.
Anthony Hutchinson, who heads public affairs for VantageScore, told USA TODAY that the company's model – the information it compiles on consumers to offer lenders information on their creditworthiness – is 'more holistic' than FICO's.
Among other things, Hutchinson said, VantageScore's model is able to blend consumer information over a period of time. This 'trended' approach is more useful than just looking at a consumer at one moment in time, he argues, because it can show whether that person's financial health is improving or weakening.
VantageScore also claims that there are 33 million Americans who are 'credit invisible' – that is, they have no credit score at all – and whom the company's more modern approaches to collecting data do better at scoring.
But Wu says she doubts those numbers. In fact, the Consumer Financial Protection Bureau recently released research that suggests the number of Americans who are credit invisible is only about one-tenth that estimate, or roughly 2.7 million people. Wu also notes that FICO has also incorporated some of the more dynamic credit attributes VantageScore boasts about.
In response to USA TODAY's request for comment, a FICO spokesperson emailed:
'FICO welcomes competition on a level playing field among credit score providers. We compete vigorously in every U.S. consumer credit market, and the FICO Score is freely chosen by lenders, investors, and other market participants because it is trusted as the most predictive and reliable credit score. FICO scores are the industry standard and preferred choice for evaluating creditworthiness in the mortgage process, regardless of whether the loan is conforming or non-conforming."
Opening up the credit scoring space to real competition – and easing the path to homeownership for more Americans – gets bipartisan support even in a polarized Washington. Pulte's decision had its origins in legislation introduced by Republican Senator Tim Scott (South Carolina) and Democratic Senator Mark Warner (Virginia) years ago, Hutchinson points out.
The legislation, the Credit Score Competition Act, was signed into law in 2018 as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act, but FHFA took several years to decide how to implement it. Senator Scott was one lawmaker urging quicker action on that front, in 2023.
Wu believes the slower approach was for the best, given the number of stakeholders involved in making such a big transition. 'I think changing a well-thought out decision that was the result of a lot of process by an arbitrary tweet is bonkers,'' she said. "I have no idea if it complies with the 2018 law or the regulations, or if it's arbitrary and capricious.'
Aside from concerns about the industry backdrop, VantageScore's presence might not even make a difference for consumers in terms of immediate savings. When asked about how much less one of their scores would cost compared to a FICO score, the company deflected the question to the credit bureaus.Equifax and Experian did not immediately respond to a request for comment, and a TransUnion spokesperson referred USA TODAY to an industry group for more information.
CFA's Cornelissen, despite her support for the step, acknowledges the savings will be minor: in the 'tens of dollars," she said.
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