Federal Housing Finance Agency approves new credit score models

Newly approved models will improve accuracy, strengthen access to credit, and enhance safety and soundness

On October 24, 2022, the Federal Housing Finance Agency (FHFA) announced the validation and approval of new credit score models for use by Fannie Mae and Freddie Mac (the Enterprises).  The new models are known as the FICO 10T and the VantageScore 4.0.

The transition is the result of a long effort to support accuracy, innovation, and inclusion in credit score models used by the Enterprises. After a multiyear transition period, lenders will be required to deliver loans to Fannie Mae or Freddie Mac with both scores when available. The FHFA also announced that the Enterprises will begin requiring two credit reports–rather than three—from national consumer reporting agencies.

With this announcement, mortgage borrowers and first-time homebuyers can expect:

More Accurate Credit Scores: Extensive testing and validation by the Enterprises has ensured that the new credit models meet the necessary accuracy standards to treat borrowers fairly.

More Inclusive Credit Scores:  Both FICO 10T and VantageScore 4.0 will now include payment history information such as rent, utilities, and telecom payments.

Enhanced Safety and Soundness in the Housing Market: Promoting accuracy and newer innovative credit score models in the housing finance system will ultimately lead to better outcomes for borrowers, lenders, and the Enterprises.

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