Mortgage lenders to consider rent history in mortgage applications

It might get a bit easier for prospective homebuyers to get a mortgage. On Wednesday, two Trump administration housing officials announced that lenders can consider rent payment history when deciding whether to make a loan.

For years, would-be homebuyers could only prove their creditworthiness through FICO scores, which include their track records on things like credit card and car loan repayments. But that’s not the whole picture, said Scott Turner, Secretary of the Department of Housing and Urban Development.

“New models include rental history, utility payments, and other data that is not currently accounted for when applying for a home mortgage,” he said.

Now, homebuyers will be able to use the VantageScore 4.0 model, which includes all that payment history, when applying for home loans backed by the Federal Housing Administration or mortgage giants Fannie Mae and Freddie Mac. This is a big deal, since Fannie Mae and Freddie Mac guarantee a majority of U.S. mortgages.

AI will be used to screen out risky borrowers, according to Bill Pulte, Federal Housing ​Finance Agency director.

“And so we feel very confident that this hasn’t increased risk,” he said. “In fact, it’s decreased risk, with what we’re doing here.”

Poulte added that, initially, Pennymac, Rocket, and 19 other big lenders will be able to use Vantage scores.