Mortgage applicants can now qualify for a home loan with VantageScore.
For years, the industry has relied solely upon FICO scores to determine pricing and eligibility.
But due to a recent policy change, both Fannie Mae and Freddie Mac will now accept FICO scores or the new VantageScore.
In addition, the option will soon roll out to FHA loans as well, giving lenders and borrowers more options when it comes to credit scoring.
Top lender UWM’s new policy offers the choice to use either score, whichever is more favorable.
VantageScore Already Being Used by Lenders to Decision Mortgages
A week ago, HUD Secretary Scott Turner and FHFA Director William J. Pulte jointly announced the implementation of the “first new credit score models for mortgages in decades.”
This advanced the Credit Score Competition Act of 2018 as signed by President Trump during his first term.
It allows for the use of both VantageScore 4.0 and the newer FICO Score 10T.
And just like that, lenders are off to the races, which is nice to see, thanks to an immediate updating of selling guides by Fannie Mae and Freddie Mac.
However, it remains in a sort of pilot mode at the moment because VantageScore is still fairly untested and a lot is at stake.
To address that concern, the nation’s largest mortgage lender, United Wholesale Mortgage, is offering the new score with a major caveat.
VantageScore Must Be Reduced By 20 Points to Be Used
While UWM is taking the lead on this, as they should be being the top mortgage lender of 2025, they are doing so with guardrails.
Instead of taking the new score at face value, it will be reduced by 20 points to compensate for the lack of historical data and usage.
But all mortgage broker partners who use the company’s No-Cost Credit Report will see both models run simultaneously, automatically.
So there’s nothing that needs to be done to gain access. Brokers get to see both scores, then use the one that’s most favorable.
Let’s take an example where a borrower has a mid-score of 740 for VantageScore (mortgage lenders pull three credit scores but use your mid-score).
It would be reduced to 720 under UWM’s rules.
However, that could still better the borrower’s middle FICO score of 716, enabling cheaper pricing and/or easier qualifying.
As such, borrowers who already qualify with FICO but have a higher VantageScore could achieve a more favorable outcome due to lower loan-level price adjustments (LLPAs).
For the record, this only applies to conventional loans backed by Fannie and Freddie and the max loan-to-value ratio (LTV) is 80%.
Over time, it might expand to other products, such as FHA loans, and perhaps allow for higher LTVs as well.
Are There Gamification Concerns with Two Credit Scoring Models Available?
There have been concerns that lenders and mortgage brokers will attempt to gamify the system by using whichever score is higher.
So they can pull both and then go with the one that provides better pricing or easier qualifying.
But it appears UWM is taking the lead on that and imposing the 20-point lender overlay to ensure it’s not the case.
It’s not clear yet whether the VantageScore is less predictive than FICO, or if they tend to come in higher.
However, given the lack of history with VantageScore, it appears UWM decided to get ahead of it to avoid any controversy.
Chances are both scores will come in similarly, and even if VantageScore is significantly higher, somehow, the 20-point haircut should even the playing field.
There will of course be cases where it’ll be opportunistic to use one or the other, especially if the VantageScore is lower (and needs to be reduced another 20 points).
Either way, it’s nice to see the end of a monopoly and more choice when it comes to credit scores for mortgages.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.