WASHINGTON D.C (VINnews)-Fannie Mae and Freddie Mac will now accept alternative credit scores that incorporate on-time rent and utility payments, a move aimed at expanding mortgage access for creditworthy borrowers with limited traditional credit histories, Housing and Urban Development Secretary Scott Turner said Wednesday.

Turner highlighted the change as a step to help younger buyers, saying it opens the credit market “for credit-worthy people—for Gen Z, millennial first-time homebuyers.”

The government-sponsored enterprises, which back a majority of U.S. mortgages, are adopting models such as VantageScore 4.0 that consider alternative data like rental and utility payment history alongside traditional credit information. Federal Housing Finance Agency Director William Pulte announced the agencies will also move toward a similar updated FICO model. The FHFA approved the models in 2022.

Turner also said the Federal Housing Administration, part of HUD, will consider these scores for FHA-insured mortgages.

Officials described the shift as modernizing credit assessment with more predictive tools that better reflect responsible payment behavior, potentially benefiting millions of Americans who pay rent on time but have thinner credit files.

The change builds on earlier efforts to incorporate alternative data into mortgage underwriting while maintaining risk standards for the enterprises. No immediate effective date for all loans was specified in the announcements, but implementation follows years of preparation.

VINnews will continue to monitor developments in housing finance policy.