FHA updates policy for implementing alternative credit scores

The Federal Housing Administration published updated minimum decision credit score methodology to formalize the addition of the VantageScore 4.0 and FICO Score 10T as acceptable credit score models alongside Classic FICO.

Details: The FHA said the policy—which applies to Title II mortgage programs for FHA case numbers assigned on or after Jan. 1, 2027—establishes guidance for determining the MDCS at the transaction level when multiple models are submitted.

Recent Guidance: The FHA last month announced an implementation date of Jan. 1, 2027, to add VantageScore 4.0 and FICO Score 10T to the existing Classic FICO as eligible credit score models for FHA-insured mortgage underwriting. It also issued a preparedness guide for mortgage holders and other stakeholders regarding the addition of the alternative models.

ICBA Advocacy:

• ICBA last week met with Federal Housing Finance Agency officials to discuss implementation of the new scoring models.

• In March 2025 recommendations, ICBA and other groups said the FHFA’s Credit Score Models and Reports Initiative is overly complex, costly to consumers, and missing key requirements for a successful transition.

• In a previous letter to FHFA Director Bill Pulte, ICBA called on the agency to reconsider the implementation of policies, projects, and initiatives that could be harmful for the housing finance industry, such as the credit score models.

More: A 2024 Independent Banker article breaks down the FHFA credit scoring initiative and ICBA’s concerns with the models.