With mortgage rates continuing to climb across the U.S. and Europe, the dream of owning a home has become increasingly out of reach for many young families. Barriers such as high down payments, strict income thresholds, and rigid credit scoring systems have made the mortgage process difficult—especially for first-time buyers.
But a groundbreaking shift in credit policy spearheaded by U.S. mortgage giants Fannie Mae and Freddie Mac may change that narrative. By allowing on-time rent payments to be considered in mortgage credit evaluations, this reform offers new possibilities to millions of renters who were previously shut out of the homeownership market.
Until now, mortgage lenders—particularly in the U.S.—have relied heavily on the FICO credit scoring system. European countries, while using variations of their own, also tend to focus primarily on traditional financial behavior, such as credit card usage, loan history, and revolving debt.
This framework leaves out a significant segment of the population: people who pay their rent, utilities, and telecom bills on time, yet lack sufficient traditional credit usage to be evaluated properly. Young professionals, immigrants, rural residents, and low-income earners are often labeled “thin file” borrowers, not because they are financially irresponsible, but simply because their financial lives don’t align with the parameters of legacy scoring models.
On July 8, 2025, Fannie Mae and Freddie Mac officially announced a game-changing update: mortgage lenders can now use the VantageScore credit model in place of, or alongside, FICO. VantageScore considers rent, utility, and phone bill payment history—if reported to the major credit bureaus (Equifax,
Experian, or TransUnion)—and requires just one month of payment history to generate a score, compared to six months for most FICO models. This expansion gives many low-credit or underrepresented borrowers a shot at mortgage approval—without needing to take on risky forms of debt just to build credit.
For people like Ms. A, a software engineer in the San Francisco Bay Area, this change is more than a technical tweak—it’s a breakthrough. Earning under $100,000 annually and paying nearly $3,000 per month in rent, she maintained a flawless payment history. But due to her decision to avoid revolving credit and installment loans, her FICO score hovered around 640—just shy of qualifying for most mortgage products.
Once the policy change went into effect, she was able to leverage her VantageScore and secure a mortgage with a 4.5% fixed rate. “Finally, I have a real shot at owning a home,” she said.
Across the Atlantic in London, a similar story is unfolding. Family B, recent immigrants from Eastern Europe, have lived in the city’s Hackney neighborhood for years. They have stable jobs in hospitality and pay their bills on time every month.
Yet due to their thin traditional credit files, banks consistently denied their loan applications. With the new policy in place, their rental history became a powerful asset, helping them qualify for a mortgage and allowing them to begin planning for their first family home.
In Vancouver, Canada, Mr. C juggles two jobs while raising a child. Though he consistently pays rent and utility bills, his frequent relocations and minimal credit usage caused his FICO score to fluctuate unpredictably. After the policy change, his VantageScore reflected his actual financial behavior for the first time. “Finally, all those years of paying rent on time are worth something,” he said proudly.
Beyond individual stories, this policy shift is already sending ripples through the financial sector. First, it’s expanding the pool of mortgage-eligible borrowers. In high-rent cities like San Francisco, New York, and Washington, thousands of renters who previously didn’t qualify for a mortgage are now entering the market.
Analysts estimate that the change could increase mortgage applications by 5–10% over the next 12 months, injecting billions into the housing finance sector.
Second, the new credit scoring option introduces competition into a space long dominated by FICO. Since 2022, the cost of pulling credit scores for mortgage applications has soared—by some estimates, as much as 400%. VantageScore, which is often accessible to consumers for free, could help reduce these costs and drive down closing fees for borrowers.
Credit bureaus and fintech platforms will also need to adapt. Reporting platforms like RentTrack and LevelCredit, which facilitate rent payment reporting to credit bureaus, are likely to see a surge in demand. Meanwhile, major bureaus such as Equifax, Experian, and TransUnion will have to ensure data quality and timely integration with property management systems to maintain lender confidence.
At the regulatory level, the change aligns with the broader push for financial transparency. In 2024, the Consumer Financial Protection Bureau launched a sweeping review of so-called “junk fees” that inflate the cost of closing on a mortgage.
The agency’s former director, Rohit Chopra, criticized FICO’s market dominance and emphasized the need for a more competitive and consumer-friendly credit ecosystem. By legitimizing VantageScore in the mortgage process, the Federal Housing Finance Agency has taken a major step toward leveling the playing field.
Still, challenges remain. Some financial institutions question the reliability of rental payment data, especially when reporting is inconsistent or delayed. Others note that different versions of the VantageScore algorithm may yield varied results, complicating underwriting standards. And while the FICO model may be less inclusive, many lenders still regard it as the most robust and time-tested risk predictor.
There’s also a larger concern: even if renters can now qualify for a mortgage, are they financially prepared to sustain it? Timely rent payments don’t always translate into readiness for homeownership, especially when facing rising property taxes, maintenance costs, and insurance. For the new system to succeed, lenders must pair expanded access with rigorous affordability checks and borrower education.
For renters, the implications are clear. If you consistently pay your rent, you may now have a new tool to help you become a homeowner. But it’s essential to take proactive steps: ask your landlord or property management company whether they report rent to the credit bureaus, regularly monitor your credit reports for accuracy, and compare mortgage products based on both FICO and VantageScore eligibility criteria.
For lenders, the shift presents both opportunity and responsibility. By integrating rent-based scoring models, they can better serve an untapped demographic while also expanding loan volume. But this must be done with appropriate risk controls, transparent pricing, and reliable technology.
From a macroeconomic perspective, this policy could stimulate housing demand, especially in tight urban markets. As more renters convert to homeowners, industries linked to real estate—home renovation, furniture, appliances, moving services—are likely to benefit. However, in cities with limited supply and high demand, this surge may further inflate home prices unless counterbalanced by strategic housing development policies.
Banks and financial institutions that capitalize on this opportunity will likely enjoy growth in mortgage origination and client retention. Yet they must also invest in better data infrastructure and AI-driven underwriting tools to manage the unique risks posed by newly qualified borrowers.
Ultimately, this policy reform represents a meaningful step toward financial inclusion. It recognizes that responsible financial behavior isn’t limited to credit card usage or car loans—it’s also reflected in paying the rent, month after month, without fail. And now, for the first time, the credit system is starting to see that too.
This isn’t just about improving a credit score—it’s about rewriting what counts as creditworthy in the first place. For millions of renters across the U.S., Canada, and Europe, this may finally be their moment to move from paying rent to building equity. Because in today’s housing market, a rent receipt might just become your ticket to a home of your own.