In an effort to “increase competition [in] the credit score ecosystem and consistent with President Trump’s landslide mandate to lower costs,” Federal Housing Finance Agency Director Bill Pulte has ordered Fannie Mae and Freddie Mac to start using VantageScore 4.0 in addition to Tri Merge for underwriting mortgage loans.
In a series of posts on X, Pulte writes that “Fannie and Freddie will ALLOW lenders to use Vantage 4.0 Score with no current requirement to build new infrastructure (stays Tri Merge).”
One of the features of VantageScore 4.0 is that it allows lenders to consider applicants’ rent history as a criteria for determining creditworthiness.
“My ORDER today (thanks to my boss, POTUS) will allow for Americans to use their RENT to qualify for a mortgage,” Pulte writes on X. “Credit history will no longer just include credit cards and loans. This is HUGE.”
He further adds: “It’s absurd that someone can have a history of $2,200 a month for rent but they want to buy a home for $1,750 a month and can’t.”
The idea of lenders using rent data as a means to determine borrower creditworthiness isn’t new. For years now, lenders have been looking at alternate data for credit underwriting – including utility bills, such electric, gas and water, as well as rent payments.
However, adding rent payment data to the underwriting process is not without its risks – just as much as it helps renters who are on time, it hurts those who are not. A survey conducted by the Consumer Financial Protection Bureau in 2023 found that 19 percent of renters reported being “behind on their rent at some point in the past year.”
There is also a question as to whether rent payment data would be self-reported by landlords – in which case, it may
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