A woman in military uniform converses with a woman in civilian attire, highlighting a dialogue between service and community.

If you’ve seen the headlines this week about Fannie Mae and Freddie Mac changing how lenders evaluate credit, you might be wondering what it means for your home loan.

The short answer is simple: it’s a significant change for conventional borrowers. However, if you’re using a VA loan, LoanGoal has already been offering this type of flexibility for years.

What Just Happened

On Wednesday, the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, announced that both government-backed mortgage giants will begin accepting loans evaluated using VantageScore 4.0, a newer credit scoring model that considers additional data, including rent and utility payment history.

FHFA Director William Pulte described the move as part of a broader “credit score modernization” initiative and estimated the changes could eventually affect tens of millions of Americans.

A second scoring model, FICO Score 10T, is also expected to roll out. Like VantageScore 4.0, it incorporates both positive and negative rental payment history when that information is reported to the credit bureaus.

For now, implementation is limited:

  • Approved lenders can choose between VantageScore 4.0 and traditional FICO scoring.
  • Freddie Mac has already begun securitizing a limited number of loans evaluated using VantageScore 4.0 as part of a pilot program.

The goal of both models is straightforward:

Give more borrowers, especially those with limited credit histories, credit for bills they already pay on time, even if those payments traditionally weren’t reflected in their credit score.

Why This Matters for Conventional Borrowers

If your credit history is relatively thin, perhaps because you rent instead of own or you don’t have many traditional credit accounts, a scoring model that includes rental payment history may provide a more accurate (and potentially higher) credit score than traditional FICO models.

That could help some borrowers qualify for a conventional mortgage when they previously could not.

Why VA Borrowers Are Already Ahead

Here’s the part that doesn’t always make the headlines.

These new scoring models apply to loans sold through Fannie Mae and Freddie Mac, which means they primarily affect the conventional mortgage market.

VA loans work differently.

VA loans are guaranteed by the Department of Veterans Affairs, not underwritten according to Fannie or Freddie guidelines. That gives VA lenders greater flexibility in establishing their credit standards.

At LoanGoal, we’ve used that flexibility since 2001.

We’re a true no-overlay VA lender, meaning we don’t add extra credit score or income requirements beyond what the VA itself requires.

Instead, we approve VA loans with credit scores as low as 500 through manual underwriting, allowing us to evaluate the complete financial picture rather than relying solely on a three-digit credit score.

The LoanGoal Advantage

While the conventional mortgage industry gradually rolls out new credit scoring models over the coming months, LoanGoal’s manual underwriting process already considers many of the same factors these newer models are designed to recognize, including:

  • Rental payment history
  • Consistent on-time payment patterns
  • Overall financial stability
  • Real-world creditworthiness

That means eligible veterans with credit scores as low as 500 don’t have to wait for a future “modernization” rollout.

We’ve already been evaluating borrowers this way for years.

What This Could Mean for VA Loans in the Future

This is certainly worth watching.

The FHFA has made it clear that broader credit score modernization is a long-term objective across the housing finance system.

Additionally, HUD has indicated it plans to accept both VantageScore 4.0 and FICO 10T for FHA-insured loans.

It wouldn’t be surprising if future VA loan credit evaluations eventually incorporate similar rent and utility payment data as well.

If that happens, we’ll update this article.

For now, however, VA borrowers working with a no-overlay lender like LoanGoal don’t need a new scoring model to receive fair consideration.

Veteran Profile

Staff Sergeant Diaz

Staff Sergeant Diaz has a 540 credit score following financial challenges after a PCS move.

Despite that setback, she has:

  • Paid rent on time for the past three years
  • Maintained stable employment and income at her current duty station

With many lenders that impose additional credit overlays, her score alone might trigger an automatic denial.

At LoanGoal, her application receives manual underwriting, where her rental history, stable income, and overall financial picture play a central role in the lending decision.

The Bottom Line

Credit score modernization is positive news for the mortgage industry and could eventually expand homeownership opportunities for conventional borrowers with limited credit histories.

However, if you’re a:

  • Veteran
  • Active-duty service member
  • Eligible surviving spouse

…you don’t have to wait for a phased rollout of new scoring models.

For more than 20 years, LoanGoal has manually underwritten VA loans by evaluating the entire borrower, not just a credit score.

If you’re unsure where your credit stands or whether you qualify for a VA loan, that’s exactly what our manual underwriting process is designed to determine.

Contact LoanGoal today, and we’ll walk through your unique situation.

LoanGoal — Access Capital Group, Inc. | NMLS #33043
202 E. Earll Drive, Suite 460, Phoenix, AZ 85012
602-648-5862 | [email protected]
VA loan specialists since 2001.

Apply Now at LoanGoal.com — Start your VA loan application online
VA Loan Program Details — 500 min credit score, $0 down, no overlays
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