The administration’s change hopes to open doors to a larger market of renters and is expected to benefit younger renters in particular with increased eligibility for homeownership. 

Under the new policy, VantageScore 4.0 credit scores will now be considered by Fannie Mae and Freddie Mac for mortgages. Previously, FICO credit scoring, which does not include rental history, was almost solely considered when looking to buy a home.

The shift is also part of an effort to lower costs and, ‘to increase competition to the Credit Score Ecosystem,’ said Bill Pulte on the social media platform X. Pulte is the director of the Federal Housing Finance Agency. 

The new policy could potentially benefit younger buyers, renters without credit cards, and underbanked households. (RELATED: Businessman’s Conservative Bonafides Questioned in New Wisconsin Governor Bid)

Kevin Thompson, CEO of 9i Capital Group and host of the 9i Podcast, weighed in. ‘VantageScores are considered more flexible than traditional credit scores. They incorporate both financial and non-financial data—like utility and rent payments—to help establish creditworthiness, especially for individuals with limited credit history,’ he said. 

However, this is not without potential downsides. ‘Even if the VantageScore appears solid, financial institutions may still view these borrowers as higher risk and compensate by charging higher interest rates. So while this is a step in the right direction, it may come at a cost—access, yes, but potentially at higher borrowing rates,’ Thompson cautioned. 

The overall view seems to be that integrating rent payment history into mortgage lending could open homeownership opportunities for renters who have historically been excluded by the traditional credit system. (RELATED: Milwaukee Police Slayer Had History of Violence)