A major shift in federal policy is giving millions of “credit invisible” Americans a real shot at homeownership.
By updating the way creditworthiness is measured, government-run mortgage giants Fannie Mae and Freddie Mac are now moving beyond rigid, outdated systems to include on time rental history in their lending decisions. This change is expected to unlock hundreds of billions in new mortgage opportunities for people who have the cash flow to buy a home but lack a traditional credit footprint.
The move comes as the U.S. Federal Housing Finance Agency (FHFA) pushes to modernize the financial landscape. FHFA Director William Pulte recently expanded a pilot program allowing lenders to use VantageScore and updated FICO models that track trended data. Pulte has been vocal about the common sense nature of this update, arguing that if late payments can damage a person’s standing, then a perfect payment record should help it. He noted that the lack of a positive impact from payment history was nonsense, as these habits are often the best indicators of how someone will handle a mortgage.
This update is a game changer for the 7.7 million Americans, including freelancers, gig workers, and young adults, who often have “thin” credit files.
Realtor.com senior economist Jake Krimmel points out that these borrowers “are probably qualified as a whole, but not on paper under the current rigid, outdated system.”
VantageScore Chief Economist Rikard Bandebo agrees, stating the new model “allows borrowers to demonstrate responsible financial behavior that legacy credit scoring models currently overlook.” For many, this shift could result in a score boost of nearly 70 points, finally pushing them over the 620 threshold required for traditional loans.
Industry leaders are already seeing the benefits of a more inclusive approach. Bob Johnson, head of originations at Newrez, found that incorporating this data provides a “more holistic view” of a borrower without slowing down the lending process.
According to Johnson, “For consumers, the takeaway is straightforward: Consistent on-time payment behavior across a wider range of obligations can now show up in a credit score in ways it often did not under the legacy models. That is particularly meaningful for thin-file and previously unscoreable borrowers.”
Fannie Mae acting CEO Peter Akwaboah echoed this sentiment, noting the move will “support affordability and access through industry innovation and competition.”
While the policy is a massive win for financial inclusion, experts remind us that credit scores are only one piece of the puzzle. With high interest rates and a tight housing supply, the broader economy still plays a major role. Krimmel warned that “policies expanding the credit pool are only as sound as the labor market supporting it,” adding that “most importantly though for downside risks, the economic backdrop is somewhere between uncertain and unstable.”
For millions of renters, however, this change represents the first major step toward turning a monthly rent check into a long-term investment.
