What it means for homebuyers – and when to expect it
Last week, Bill Pulte (yes, from Pulte Homes — and now Director of the Federal Housing Finance Agency) made a major announcement:
VantageScore will soon be accepted by Fannie Mae and Freddie Mac for mortgage underwriting.
That sounds like a big deal, and it is — but not for the reasons you might think.
Let’s break it down…
What is VantageScore?
Key Differences: VantageScore vs. FICO
1. Shorter credit history needed:
VantageScore can generate a score for consumers with as little as one month of credit history.
(FICO usually requires at least six months.)
2. More forgiving of past issues:
VantageScore may weigh recent late payments or collections less heavily, making it a little more flexible — especially for younger or underserved borrowers.
Why This Could Be a Good Thing
- More Buyers Could Qualify:
Up to 37 million Americans who currently can’t get a FICO score might be able to qualify under VantageScore. - Great News for First-Time Buyers:
Especially younger borrowers, immigrants, and those without traditional credit profiles. - Could Lower Lender Costs:
Competition between FICO and VantageScore may drive down costs for lenders — and hopefully, for borrowers too.
What’s the Catch?
Mortgage Systems Still Run on FICO:
Underwriting software and investor rules are built around FICO. That will take time and investment to change.
No One Is Using VantageScore for Mortgages Yet:
Even though FHFA has given the green light, it will take years before lenders can actually start using it.
Could Create Confusion:
If one score is used for mortgages and another for everything else (credit cards, auto loans, etc.), consumers may get mixed messages.
When Will This Happen?
Don’t expect anything to change overnight. The timeline looks like this:
- 2024: Announcement and planning
- 2025–2026: Tech updates, testing, and dual-score integration
- 2027+: Some lenders may begin using VantageScore alongside FICO
So while the news is encouraging, we’re at least 2–3 years away from this affecting your mortgage approval.
What You can Do Right Now
If you’re a buyer with limited or non-traditional credit:
- Don’t wait for VantageScore.
- Explore options like VA or FHA loans.
- Ask about manual underwriting and alternative credit (like rent or utility history).
We help buyers like this every day — and we’d love to walk you through your options.
Bottom Line:
This is a tough time — but you don’t have to figure it out alone.
📞 Have questions about credit scores and mortgage approvals?
Let’s talk. Call us at (830) 402-4284 or visit NovumHomeLoans.com to get started.
