Change to Allow Rent Payments Factor Into Credit Score Could Help 7.7M Americans

For decades, you could make every rent payment on time for 10 years straight and it would mean exactly nothing on your credit score. That absurdity is finally ending -- and it could unlock homeownership for millions of Americans who've been locked out of the system entirely.

Fannie Mae and Freddie Mac, the government-run mortgage giants that back the majority of U.S. home loans, announced last month that they will accept mortgages underwritten using VantageScore credit models -- which factor in on-time rental payments -- instead of requiring traditional FICO scores.

The impact could be substantial. VantageScore estimates that including rental payment history would allow approximately 7.7 million Americans to boost their credit scores above 620, the threshold for qualifying for a conventional mortgage under GSE guidelines.

That's not a marginal adjustment. That's a door opening for a population that the current system treats as financially invisible.

## How We Got Here: The 'Credit Invisible' Problem

About 45 million Americans have either no credit score or a score too thin to generate a traditional FICO rating. They're called "credit invisibles" -- people who pay their bills on time, hold steady jobs, and reliably cover their rent, but who exist outside the system that lenders use to assess risk.

The problem disproportionately affects young adults, immigrants, gig workers, freelancers, and low-income households. If you've never had a credit card, taken out an auto loan, or held a mortgage, the traditional credit system has no record of you. You could have paid $2,000 a month in rent on time for five years and FICO would rate you as if you'd never demonstrated financial responsibility at all.

That changes with VantageScore's model, which incorporates "trended data" -- rental payment history, utility payments, and other recurring obligations reported to the three major credit bureaus (Equifax, Experian, and TransUnion, which jointly operate VantageScore).

FICO is also adapting. Its FICO 10T model now considers positive and negative rental payment history reported to the bureaus. But the Fannie/Freddie rule change specifically opens the door for VantageScore-based underwriting, which is the more significant shift.

## The Numbers Behind the Change

VantageScore's analysis of 600,000 people last year found that roughly 10% of the 77 million credit-relevant renters in the country would benefit from including rental payment history. For these Americans, adding rent data would push their score to at least 620.

Young consumers see the biggest gains: average credit scores rise by 67 points, with some jumping as much as 100 points, according to VantageScore Chief Economist Rikard Bandebo.

The company also argues -- and this is the part lenders care about -- that rental data improves risk prediction. Their models identify up to 11% more defaults in the riskiest score ranges, meaning the data helps lenders avoid bad loans, not just approve more of them.

VantageScore estimates the market opportunity at 2.1 million households and $777 billion in new mortgage volume. That's not a typo. Nearly three-quarters of a trillion dollars in potential lending that the current system is leaving on the table.

## Early Results Are Promising

Pennsylvania-based mortgage lender Newrez has already originated the first $10 million in loans using VantageScore data. Bob Johnson, head of originations at Newrez, said the process ran similarly to its normal lending operations -- validating that the model can be applied without overhauling existing underwriting infrastructure.

United Wholesale Mortgage, one of the nation's largest wholesale lenders, announced April 29 that it would begin accepting both FICO and VantageScore. HUD Secretary Scott Turner said the department would follow with VantageScore usage "soon."

Fannie Mae's acting CEO Peter Akwaboah framed the change as supporting "affordability and access through industry innovation and competition." Fannie Mae provided $116 billion in liquidity to 385,000 households in the first quarter alone.

## The Risks Nobody Is Talking About

This is not a free lunch. Several concerns deserve attention:

**Late rent payments will hurt you.** If rental payment history goes both ways -- and it does -- then missed or late rent payments will now negatively impact credit scores under these models. For renters who have been invisible to the credit system, that invisibility cut both ways: the system couldn't see their good behavior, but it also couldn't see their bad behavior. That changes now.

**FHA delinquencies are already rising.** The share of Federal Housing Administration loans in delinquency has been climbing, and expanding the pool of eligible borrowers at a time when delinquencies are increasing raises legitimate questions about whether some of the newly eligible borrowers are being set up to fail.

**The labor market underpins everything.** As Realtor.com economist Jake Krimmel noted, "Policies expanding the credit pool are only as sound as the labor market supporting it." If the economy weakens -- and the Fed's own Financial Stability Report, also released this week, identifies significant risks -- then millions of newly eligible borrowers could face the same default pressures that have been building in the subprime auto and credit card markets.

**State-by-state patchwork.** Only California, Colorado, and New York have enacted rent reporting programs so far, with nine other states considering legislation. The full benefit of the VantageScore model depends on renters actually having their payment history reported to credit bureaus -- and right now, most landlords don't report.

## What This Means For You

**If you're a renter with no credit history or a thin file**, this is potentially the biggest change to your financial life in decades. Start checking whether your landlord reports rental payments to the credit bureaus. If they don't, services like RentTrack, Boompay, and Rental Kharma can report your rent payments for a small monthly fee. Get that data flowing now, before you apply for a mortgage.

**If you're a renter who sometimes pays late**, be warned: this change works both ways. Under the new models, a late rent payment can damage your credit just like a late credit card payment. Pay your rent on time, every time.

**If you're a landlord**, consider reporting rental payments to credit bureaus. It incentivizes on-time payment (tenants know it helps their credit), reduces your delinquency risk, and contributes to a system that ultimately expands your pool of qualified renters. Services like Experian RentBureau and ClearNow make this straightforward.

**If you're a mortgage lender**, the VantageScore integration is now live at Fannie Mae and Freddie Mac. The underwriting process doesn't change significantly, but the pool of eligible borrowers expands. Expect your compliance team to update procedures within weeks.

**If you're watching the housing market from the sidelines**, this is a structural shift worth tracking. Expanding credit access by 7.7 million potential homeowners doesn't automatically solve the affordability crisis -- supply constraints, high rates, and zoning reform still matter more -- but it does mean more buyers competing for the same limited inventory. That could push prices higher in the short term before it expands access in the long term.

The credit scoring system has been broken for decades. This fix is real, it's backed by data, and it's being adopted by the institutions that control the mortgage market. The question now is whether the economy stays strong enough for the newly eligible to actually use the door that just opened.