FHA, Fannie, Freddie to allow use of alternate credit score models

Federal housing agencies announced Wednesday they will accept alternate credit scoring models for mortgages, a change America’s Credit Unions has supported to help reduce costs for borrowers and lenders.

The Federal Housing Administration (FHA) will permit the use of VantageScore 4.0 and FICO 10T as eligible credit scoring models for FHA-insured mortgage underwriting. Government-sponsored enterprises Fannie Mae and Freddie Mac are also moving forward with VantageScore 4.0 and FICO Score 10T, updating their selling guides with the new scores and immediately accepting Vantage-scored loans from approved lenders.

America’s Credit Unions addressed this issue in a January letter to the National Economic Council, part of recommendations for near-term actions to directly lower costs for home mortgage borrowers.