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FHFA to replace Classic FICO with more inclusive credit model 

Fannie Mae and Freddie Mac will accept FICO 10T and VantageScore 4.0 in a multiyear effort with the industry 

The Federal Housing Finance Agency (FHFA) on Monday announced that it is replacing the Classic FICO credit model, which Fannie Mae and Freddie Mac have relied on for nearly 20 years, for the FICO 10T and VantageScore 4.0. 

“They will provide more accurate credit scores, and we believe the market, including investors, will be provided with an improved understanding of risk from not just one but two different credit score models,” Sandra Thompson, the FHFA’s director, said during the Mortgage Bankers Association (MBA) Annual Conference in Nashville. 

Thompson said the new models are more inclusive, as they factor “in new payment histories for borrowers when available, such as rent, utilities and telecom payments.” 

The FHFA director said that FHFA has supported innovation and inclusion in the credit score models since 2014. The change to FICO 10T and VantageScore 4.0, however, will take time and require close coordination across the industry, meaning it will be a multiyear effort. 

FHFA said that the agency will conduct outreach to stakeholders to ensure a smooth transition. Once implemented, lenders will be required to deliver FICO 10T and VantageScore 4.0 for each loan sold to Fannie Mae and Freddie Mac. 

In addition to the new credit score models, FHFA also announced that enterprises will require lenders to provide credit reports from two of the three nationwide CRAs, going from a tri-merge to a bi-merge credit report requirement. 


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“We expect this change will reduce costs and further promote innovation while not compromising accuracy and predictiveness of a borrower’s ability to repay,” Thompson said during the conference.

A recent study by the Urban Institute found that Black households have the most to gain by including rent payments into mortgage underwriting.

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