What Is VantageScore 4.0, and How Could It Affect Your Mortgage Application?

Key Takeaways

• VantageScore 4.0 is a newer credit scoring model that can consider information such as rent and utility payments when that information is reported to the credit bureaus.
• The model also looks at credit behavior over time, rather than relying only on a snapshot of your credit history.
• Fannie Mae and Freddie Mac now allow eligible mortgage lenders to use VantageScore 4.0, but lenders can choose whether to adopt it.
• Your credit score is only one part of a mortgage application. Income, debt, assets, employment, property details, and other factors also matter.

What Is VantageScore 4.0?

VantageScore 4.0 is a credit scoring model designed to evaluate information in your credit history and calculate a three-digit credit score.

Think of a credit scoring model as a way of turning the information in your credit report into a number that helps lenders evaluate your credit history. Different scoring models can look at that information in different ways, which means the score you see may not always be the same score a lender uses.

For years, conventional mortgages have primarily relied on what is commonly called a Classic FICO score, another type of credit scoring model.

Now, VantageScore 4.0 is an approved option for eligible mortgages sold to Fannie Mae and Freddie Mac, two organizations that play a major role in the U.S. mortgage market. The change gives participating lenders another credit scoring model they can use when evaluating eligible borrowers.

That does not mean every lender is using VantageScore 4.0. Adoption is currently optional and evolving. 

What Makes VantageScore 4.0 Different?

One of the biggest differences is the type of information the model can consider.

When reported to the credit bureaus, rent and utility payments can be included in a VantageScore 4.0 calculation. That can be particularly relevant for consumers who have a shorter credit history or fewer traditional credit accounts.

The model also uses something called trended credit data. Rather than looking only at where your credit stands today, trended data looks at patterns in your credit behavior over time, including information such as balances and payments.

That distinction matters because your credit history tells a story. For example, consistently paying down credit card balances over time can show a different pattern than carrying increasing balances month after month.

VantageScore 4.0 is designed to incorporate those longer-term patterns into its scoring model.

Could VantageScore 4.0 Affect Your Mortgage Application?

The answer depends on your specific lender, loan, and credit information available for your situation.

Because VantageScore 4.0 can consider additional information and credit behavior over time, the resulting score may be different from a score calculated using another model.

For some borrowers, particularly those with limited traditional credit histories, that could provide a different picture of their credit profile. For others, the difference may be minimal.

It’s also important to remember that a different credit score does not automatically mean a mortgage approval, lower interest rate, or better loan terms. Mortgage decisions involve multiple factors, and lenders still have to evaluate the complete application.

What Should You Do If You're Planning to Buy a Home?

You don’t need to change your financial habits simply because VantageScore 4.0 is now an option in the mortgage industry.

Continue making payments on time, manage your credit card balances carefully, avoid taking on unnecessary debt, and review your credit reports for errors before applying for a mortgage.

If you’re a renter, it may also be worth understanding whether your rent payments are being reported to the credit bureaus. Rent and utility payments can be considered by VantageScore 4.0 when they are reported, but simply paying those bills does not guarantee that they will appear in your credit history or change your score.

Most importantly, don’t assume the credit score you see online is necessarily the score your mortgage lender will use. Different scoring models can produce different results.

If you’re preparing to buy a home, your lender can explain which credit information and scoring model apply to your specific mortgage.

Is VantageScore 4.0 Replacing FICO?

VantageScore 4.0 is an additional approved credit scoring model for eligible mortgages, rather than a mandatory replacement for FICO scores.

Fannie Mae and Freddie Mac now allow approved lenders to use VantageScore 4.0, while lenders may continue using eligible Classic FICO scores.

About Luminate Bank

At Luminate Bank, we believe the mortgage process should be easier to understand.

As a full-service bank and mortgage lender, we help consumers navigate the financing process with clear information and guidance from application through closing. Luminate Bank offers a range of mortgage solutions, including conventional, FHA, VA, USDA, jumbo, construction, and other financing options nationwide. 

VantageScore 4.0 FAQs

What is VantageScore 4.0?

VantageScore 4.0 is a credit scoring model that uses information from your credit history to calculate a three-digit credit score. It can consider additional information, including reported rent and utility payments, and uses trended credit data to evaluate credit behavior over time.

Is VantageScore 4.0 the same as a FICO score?

VantageScore and FICO are different credit scoring models. They can use some of the same information from your credit history, but they calculate scores differently. That means your VantageScore and FICO score may not be identical.

Does VantageScore 4.0 use rent payments?

It can. When rent payments are reported to the nationwide credit reporting agencies, VantageScore models can use that information in calculating a credit score.

Will VantageScore 4.0 automatically help me qualify for a mortgage

A credit score is only one part of a mortgage application. Lenders also consider factors such as income, debt, assets, employment, property information, and the requirements of the specific loan program.