Mortgage lenders now have more credit score options. What to know

Key Points:

• Mortgage lenders can now use VantageScore 4.0 and soon FICO 10T, alongside the traditional FICO score, for underwriting loans sold to Fannie Mae, Freddie Mac, and insured by the FHA, potentially helping some consumers qualify for mortgages or get better rates.
• These newer credit scores include additional data points, such as rent and utility payment histories, which are not considered in the classic FICO score, benefiting renters who consistently pay on time if their payments are reported to credit bureaus.
• However, most renters' payment data is not currently reported to credit bureaus unless they or their property managers opt into rent-reporting services, which may sometimes involve a fee.
• The new scoring models also incorporate "trended data," which analyzes credit behavior over time, such as payment patterns and balances, offering a more detailed risk profile than the snapshot approach of classic FICO scores.
• Consumers may need to manage their credit card debt more consistently over months instead of just shortly before applying for a mortgage, as the new scores reflect longer-term credit behavior.