A new credit score model gives first-time home buyers, even those with little or no credit history, a better chance to qualify for a mortgage. The model, VantageScore 4.0, factors nontraditional payment history — for items like rent, utilities, and telecom — into credit score calculations. The Federal Housing Finance Agency announced in July 2025 that the model could be used for mortgages sold to Freddie Mac and Fannie Mae. As a result, an estimated 5 million more Americans may qualify for mortgage loans, according to VantageScore.
What’s Different About VantageScore 4.0?
The three main credit bureaus — Equifax, TransUnion, and Experian — developed VantageScore 4.0. The tool uses machine learning and trended data to evaluate behavior patterns over the last 24 months, says Tony Hutchinson, executive vice-president and head of public affairs at VantageScore. That’s a departure from the FICO score model of checking a consumer’s credit score at one point.
“When the original credit score was built, it focused on people who already had auto loans, mortgages, and credit card debt, and it scored you according to that,” Hutchinson says. “Nowadays, people may only have one credit card or no credit cards, but they pay their rent, telecommunications, and utilities on time.”
The way credit is used has fundamentally shifted, says Chris Joles, senior vice president and chief credit officer at Planet Home Lending. “We’ve seen people shy away from traditional use of credit cards, or they might finance a DoorDash taco delivery. If somebody’s not using a credit card, but they’re still making other payments, they should be able to establish their credit some other way.”
Model Excludes Medical Debt
Mortgage lenders need data that best predicts how consumers handle their credit load, which indicates whether they’ll pay their mortgage. Traditionally, every credit event was thought to influence the likelihood of repayment, he explains. If someone was carrying medical debt, that data would negatively affect their score, Joles. But medical debt and other credit events have become more common and aren’t necessarily viewed in that way, so VantageScore 4.0 removed medical debt collections from its model.
What’s the Same?
Even though this credit scoring model includes nontraditional payment history, traditional factors like credit card use and loan repayment history are still important, notes Joles. “It comes down to what that person’s history has been for payments, no matter what type of payment it is. Of course, rental history or even a mortgage payment is much more important than, say, a credit card payment that has a $500 balance.”
The process for consumers will be the same with VantageScore 4.0 as with FICO, Hutchinson says.
Who Will Benefit from VantageScore 4.0?
The modernized credit model will likely benefit consumers who had trouble qualifying for a mortgage, including:
- First-time home buyers
- Residents of rural and underserved communities
- Veterans and active-duty military with thin or inconsistent credit files
- Renters who have historically paid on time
- Recent immigrants
VantageScore 4.0 Credit Score Categories
VantageScore 4.0, like FICO, uses a three-digit score, but the details vary. Here are VantageScore 4.0 categories:
- Superprime (excellent credit) 781 to 850
- Prime (good credit) 661 to 780
- Near prime (fair credit) 601 to 660
- Subprime (poor credit) 300 to 600
Status of Lender Implementation and Pricing
Most lenders are evaluating the new VantageScore 4.0 model, and they’ll need time to adjust their internal procedures, loan-origination systems, and pricing structures, Joles says.
“The conventional loans and traditional mortgages side have the green light to go ahead, but there are still system limitations that need to be worked through with various vendors.”
Having an additional model in the marketplace can benefit consumers and lenders, Joles says. It should increase competition in the mortgage industry, which could mean lower credit report costs, he notes.
Lenders can use either or both scoring models. Potential home buyers can ask their lender which one they’re using, Joles says. “It’s important that the mortgage loan originator walks them through the process to make sure they get the best possible opportunity. Ultimately, it comes down to ‘What’s the best possible price I can get to finance a home, and how can I save the most money over the longest period of time?’”
Wendy Helfenbaum is an award-winning Montreal-based journalist who covers real estate, business, personal finance, and home renovation. Her work has appeared in outlets including AARP, Real Simple, BBC.com, Apartment Therapy, Costco Connection, Houzz, and PBS.
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