We have good news for aspiring homeowners: buying a home just got a little more accessible, and that’s something worth celebrating.

In a move aimed at increasing access to homeownership and lowering costs, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will now accept the VantageScore 4.0 credit model, effective immediately.

If you’re wondering what this means for you, keep reading. We’ll break it down and show you why these changes could open the door to homeownership, even if you’ve struggled to qualify in the past.

What’s Changing?

Historically, most mortgage lenders have relied on the FICO credit score, calculated from data at all three major credit bureaus (known as a tri-merge). This isn’t going away just yet, but starting now, lenders can also use VantageScore 4.0 without building any new systems or infrastructure.

Why does this matter to you? It matters because VantageScore 4.0 considers more than just the traditional data points that major credit bureaus utilize. It can include things like on-time rent payments, which is a huge plus for renters who’ve proven they can reliably pay monthly bills but might not have much other credit history.

In fact, VantageScore estimates this change could help about 33 million more Americans see a credit score on their reports. This will give many families their first real shot at a mortgage, and Luminate Bank is ready to help you make the most of it.

Why Now?

According to the FHFA’s Director, Bill Pulte, the move is about increasing competition, lowering costs, and giving more creditworthy people a chance to buy homes.

Rising costs of credit reports and concerns about fairness have fueled a push for alternatives to the traditional FICO-only approach. By accepting VantageScore, the FHFA hopes to expand access for groups who’ve historically struggled to qualify, including rural residents and consistent renters.

As Pulte put it, this change can help “forgotten Americans” by lowering closing costs and expanding opportunities.

What’s Staying the Same?

Even with this big step forward, some things remain unchanged: lenders will continue to use data from all three credit bureaus (the tri-merge) for now. Plans to move to a bi-merge system, which would rely on just two bureaus, are currently on hold.

So for now, you don’t need to worry about any big shifts in how your credit is reported. But you might notice lenders offering more flexible options in the months ahead.

What This Means for You

If you’ve been hesitant to apply for a mortgage because you thought your credit history wasn’t strong enough, now could be your moment.

Thanks to alternative data like your on-time rent and utility payments, more borrowers may qualify for a home loan. Even if you’ve applied before and didn’t quite qualify, now is a great time to take another look.

At Luminate Bank, our mortgage experts are here to help you navigate the process, review your unique situation, and find the loan option that fits your needs, no matter what credit model is used. Your dream of owning a home may be closer than you think, and we’re here to guide you every step of the way.

Ready to Explore Your Options?

Buying a home should feel exciting, not intimidating. If you’re curious about how these credit scoring changes might help you, we’re here to guide you.

Start your homebuying journey today with confidence! Reach out to your Luminate Bank mortgage advisor to get started.