New Credit Score Changes Could Help Millions Become Homeowners
A major shift in mortgage lending could soon make homeownership more accessible for millions of Americans—especially renters with limited traditional credit history.
Fannie Mae and Freddie Mac recently announced they will begin accepting mortgage applications using newer credit scoring models that include on-time rent payments as part of a borrower’s credit profile. This modernization could help many renters qualify for a mortgage who may have previously been overlooked under older credit scoring systems.
Why This Change Matters
For years, traditional mortgage approvals relied heavily on FICO credit scores, which primarily focused on credit cards, loans, and other traditional debt. But many financially responsible renters—particularly younger buyers, freelancers, gig workers, immigrants, and self-employed individuals—often have “thin” credit files despite consistently paying rent on time.
Now, newer scoring models like VantageScore 4.0 can incorporate rental payment history and utility payments into credit evaluations.
According to VantageScore, including positive rental payment history could help approximately 7.7 million Americans raise their credit scores above 620, a common minimum benchmark for qualifying for conventional mortgage financing.
A Big Opportunity for First-Time Buyers
This update could be especially meaningful for first-time homebuyers who have strong payment habits but limited credit history.
The new models aim to give lenders a broader and more accurate picture of a borrower’s financial responsibility.
In addition to expanding access to financing, VantageScore says the updated system may actually improve risk prediction by identifying more potential defaults in higher-risk score ranges.
What Homebuyers Should Know
While this change is promising, renters should understand that positive rent reporting is not yet universal. Many landlords still do not report on-time rental payments to credit bureaus.
Industry experts recommend renters:
Check whether their landlord reports rental payments
Monitor their credit reports regularly
Continue making all payments on time
Keep credit card balances low
Avoid opening unnecessary new debt before applying for a mortgage
Mortgage lenders are expected to gradually roll out these newer scoring models as implementation continues across the industry.
The Bottom Line
This credit scoring update represents one of the biggest mortgage qualification changes in years. By recognizing on-time rent payments, the industry is taking steps toward a more inclusive and modern approach to homeownership.
For responsible renters who have been shut out by traditional credit systems, this could open the door to buying a home sooner than expected.
Information from Realtor.com