Editor’s Note: This story has been updated to include additional industry reaction and context on credit score pricing.

The Federal Housing Finance Agency (FHFA) is pushing the mortgage industry into a new phase of credit score competition, with both Fannie Mae and Freddie Mac taking steps to operationalize the use of alternative scoring models alongside traditional FICO.

The move marks one of the most significant structural shifts in mortgage underwriting in decades, introducing lender choice in credit scoring while setting the stage for broader borrower access.

Federal housing officials are also signaling support beyond the GSEs. U.S. Department of Housing and Urban Development Secretary Scott Turner said expanding credit score options is intended to “expand access to sustainable homeownership,” particularly for borrowers who may be underserved by legacy models.

A Shift Away From Single-Model Dominance

FHFA said the initiative is designed to “advance into a new era of credit score competition,” breaking the long-standing reliance on a single legacy model and allowing lenders to use newer, more predictive alternatives.

Historically, conforming loans have relied on older FICO models, but FHFA previously validated both VantageScore 4.0 and FICO 10T for use by the GSEs as part of its modernization effort.

Now, that framework is moving from policy into execution.

Fannie Mae announced updates to its Selling Guide, allowing lenders to begin using VantageScore 4.0 immediately, with plans to support FICO 10T in the future.

The lender also plans to release historical credit score data tied to both models, giving the market more transparency as it evaluates performance and risk.

The goal, according to Fannie Mae, is to encourage “competition and innovation” while maintaining a measured rollout that the industry can operationalize.

At the same time, Freddie Mac confirmed it has begun accepting loans scored with VantageScore 4.0.

The move signals that both GSEs are now aligned in bringing VantageScore into the conforming market, rather than keeping it in a testing or future-state phase.

Recent NMP reporting has already pointed to mounting pressure behind this shift. A VantageScore-backed study found lenders could reduce costs and improve pre-screening accuracy by incorporating VantageScore 4.0 earlier in the process, particularly for first-time buyers.

The CHLA has been pushing for faster adoption of alternative scoring models, citing what it describes as a 1,567% increase in FICO-related costs in recent years.

That competitive pressure is already showing up in pricing. Recent moves by the credit bureaus have sharply reduced the cost of VantageScore 4.0, with Equifax offering scores for as little as $1 and TransUnion and Experian pricing near $0.99 per score. The pricing shift signals that competition is no longer theoretical, but actively reshaping the economics of credit scoring for lenders.

That push is also being echoed by the credit bureaus themselves. TransUnion said the move will help “drive affordable homeownership” while expanding competition across the mortgage ecosystem. “We commend FHFA and HUD for their leadership, and we stand ready to help lenders and investors adopt VantageScore 4.0,” said Satyan Merchant, senior vice president and mortgage business leader at TransUnion. “This milestone supports a more competitive and innovative credit scoring ecosystem, preserves prudent risk management, and expands opportunities for creditworthy borrowers to achieve homeownership.”

The Mortgage Bankers Association (MBA) also signaled support while emphasizing the importance of execution. “Today’s announcement marks an important next step in modernizing the credit scoring framework,” said Bob Broeksmit, president and CEO of the MBA, adding that implementation must ensure the changes are done “in a safe and sound manner” for lenders and the broader housing finance system.

Industry reaction to the latest move has been largely supportive. “We appreciate the FHFA and HUD’s commitment to modernizing the credit scoring landscape, a move that introduces much-needed competition into a critical segment of the mortgage process,” said Isaac Boltansky, head of public policy at Pennymac. “We believe that fostering competition in this space is a positive development for the industry and, most importantly, for the consumers who stand to benefit from a more transparent and cost-effective mortgage experience.”

The CHLA also welcomed the announcement while signaling that the push for broader changes is not over. “CHLA commends FHFA Director Pulte and HUD Secretary Turner for their announcement that they would begin accepting Vantage 4.0 now and 10T later as eligible credit scoring models on GSE and FHA loans,” said Scott Olson, executive director. “This is a very good first step, and CHLA continues to call for longer-term actions to create more competition, like Fannie and Freddie developing their own credit score capabilities.”

Why This Matters For LOs

VantageScore 4.0 uses trended credit data and can incorporate alternative payment histories, such as rent and utilities, which may help score borrowers who were previously invisible or marginal under legacy models.

That could expand the pool of mortgage-eligible borrowers, particularly among first-time buyers and those with thin credit files.

There’s also a cost component. Industry analysis suggests that introducing competition between scoring models could reduce credit report and scoring expenses by over $100 per loan in some scenarios.

Still A Transition, Not A Flip-The-Switch Moment

Despite the headline shift, FHFA and the GSEs are emphasizing a gradual implementation.

The broader transition — including system updates, AUS integration, and lender adoption — is expected to continue through 2026 as the industry works toward full operational readiness.

For now, lenders can choose whether and when to adopt the new model, meaning FICO will remain firmly in the mix for the foreseeable future.

This isn’t the end of FICO. It’s the beginning of a multi-score environment.

For LOs, the opportunity is twofold:

• More borrowers may qualify under alternative scoring
• Credit costs and competitive dynamics could shift at the loan level

But in the near term, execution — not just eligibility — will determine how quickly this actually changes day-to-day origination.