LEXINGTON, Ky. — Federal housing agencies announced Wednesday they will allow alternative credit scoring models in mortgage applications, a policy change aimed at expanding homeownership access as housing costs continue to surge and first-time buyer rates remain near historic lows, according to LEX 18 News.

The Federal Housing Finance Agency and Department of Housing and Urban Development jointly announced the move, with FHFA Director Bill Pulte and HUD Secretary Scott Turner saying the policy could enable tens of millions of Americans to qualify for mortgages previously out of reach. Starting Wednesday, Fannie Mae, Freddie Mac and Ginnie Mae — government-sponsored enterprises that guarantee home loans — will accept VantageScore 4.0 and FICO 10T credit models from approved lenders. Twenty-one of the nation's largest lenders have already been approved to use the alternative scores, with $10 million in loans already delivered under a trial program.

Traditional FICO credit scores, which range from 300 to 850, primarily consider payments that touch the credit system, often overlooking rent, utility payments and other transactions made by check or bank transfer. The new models aim to provide a fuller picture of creditworthiness by incorporating additional financial data sources. "Credit history should include rental history," Pulte said, noting that consistent rent payments over a decade may be more predictive than a single unpaid medical bill from years earlier.

The Federal Housing Administration will accept alternative credit scores for FHA-backed mortgages within the next few months, though officials declined to provide a specific timeline. HUD also said it would update selling guides to allow more lenders to accept loans with alternative scores.

However, housing policy experts cautioned that the policy's actual impact may be limited. Chi Chi Wu, director of consumer reporting at the National Consumer Law Center, told Scripps News that rising housing prices — not credit scores — remain the primary barrier to homeownership. "What is holding back a lot of folks from home ownership isn't the credit score, it's the price of buying a house," Wu said.

A 2021 Government Accountability Office study found that while alternative credit data could improve scores for some consumers, it remains unclear whether increases would be sufficient to qualify many for lower-cost mortgages. The report also noted that nearly half of consumers without scorable credit were under 24 or over 65, demographics less likely to seek mortgages.

Experts also raised concerns about potential downsides, warning that adding rental payment data to credit reports could harm renters if landlords access negative information, limiting their ability to secure future housing.