FICO 10T and Vantage Scores

The FHFA mandates using FICO 10T and Vantage this year for Fannie Mae

and Freddie Mac Loans

What started as a push to reduce costs for the lower to moderate mortgage borrower in America now bows to the credit cops to incorporate both scores, thus increasing costs.

The magic is supposed to be that the lower end person with little credit history can use rental history, utilities and recent up trends in personal habits to overcome weaker credit.

What our government forgets is this was already being done by

every good mortgage lender for free on a hand written explanation,

uploading the history, and demonstrating in writing the cause.

FICO 10T and VantageScore 4.0, mandated by the GSEs (Fannie Mae and Freddie Mac), have the potential to increase access to home loans for borrowers with lower credit scores in a couple of ways:

• Considering a broader range of financial data: These new models look beyond traditional credit history, including rent, utilities, and telecom payments [2]. This can benefit borrowers who may not have a long history with credit cards or loans but have consistently made payments on other bills.

• Accounting for trends: FICO 10T considers if your credit score is on an upward trajectory, which could be helpful for borrowers who may have had past credit issues but have recently improved their financial habits [4].

However, it's important to understand some nuances:

• Minimum requirements likely remain: Even with the new models, lenders will still have minimum credit score requirements for loans. These may not change dramatically.

• Not a guarantee: Just because you have a higher score under the new models doesn't guarantee loan approval. Other factors like income and debt-to-income ratio will still be crucial.

Overall, the new scoring system is a step towards a more inclusive approach. Borrowers with lower credit scores who can demonstrate responsible financial behavior may have a better chance of qualifying for a home loan.