Credit firms drop after Freddie and Fannie said they'll use VantageScore 4.0
Investing.com -- Shares of major credit score firms fell sharply Wednesday after Freddie Mac and Fannie Mae announced they will begin accepting mortgage loans assessed using VantageScore 4.0, marking a shift away from the exclusive use of traditional FICO scoring models.
TransUnion dropped 3.3%, FICO declined 9.1%, and Equifax fell 5.8% in midday trading.
Freddie Mac said the move aligns with U.S. Federal Housing and Fannie Mae and will be initially implemented through a limited rollout with approved lenders to ensure operational readiness before broad availability.
The company also said implementation efforts are underway for FICO Score 10T, another approved credit score model, beginning with the publication of historical credit score data slated for this summer.
"With today's announcement, we are accepting a credit score model that incorporates additional data, including on-time rent payment history," said Sonu Mittal, Freddie Mac's executive vice president and head of Single-Family Acquisitions.
After extensive testing and review, U.S. Federal Housing announced in 2022 the validation of VantageScore 4.0 and FICO Score 10T. These models leverage enhanced data and analytics, including trended credit data and rent payment history.