A recent shift in the credit-reporting industry could have a lasting impact on military families looking to buy a home. In July 2025, the Federal Housing Finance Agency (FHFA) announced that mortgage lenders that sell loans to government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac can now use the VantageScore 4.0 credit model, in addition to the long-dominant Fair Isaac Corporation (FICO) score, when evaluating borrowers for government-backed loans. 

This development to use the VantageScore model, which aims to foster competition and reduce borrower costs, comes when many people are concerned about mortgage interest rates and home affordability.

The U.S. Department of Veterans Affairs (VA) already accepts usage of the VantageScore 4.0 credit scoring model for underwriting review and approval of VA Home Loans. According to the VA, VantageScore 4.0 scores approximately 2.5 million more Veterans and servicemembers than conventional models, broadening homeownership opportunities for U.S. military personnel and their families.

While the FHFA announcement may seem like a small, behind-the-scenes policy change, it carries significant weight for military homebuyers. Understanding how credit scores work — and how they are now changing — can help you make smarter decisions as you plan to make one of the most significant purchases of your life.

Related: Download our Homebuying Guide

Lenders Have a Choice 

Acting as numerical representations of your creditworthiness, credit scores generally range from 300 to 850 and are used by lenders to assess how likely you are to repay borrowed money. Two companies provide the most widely used scores: FICO, which has been the traditional standard in mortgage lending, and VantageScore, which was developed by the three major credit bureaus — Equifax, Experian, and TransUnion. While both aim to predict the likelihood of missed payments, they use slightly different algorithms and weight factors such as payment history, length of credit history, and debt usage.

The recent FHFA announcement makes it possible for lenders who originate and sell conventional loans to the GSEs to use the newer VantageScore 4.0 model, although they may be scrambling to do so now. For decades, these lenders exclusively accepted FICO scores, giving Fair Isaac Corporation a near-monopoly in the mortgage space. This change was driven in part by rising concerns about cost and access. Last November, FICO raised its wholesale royalty fee from $3.50 to $4.95 per score, a cost that many lenders pass on to borrowers.

Why the Change?

The Consumer Financial Protection Bureau (CFPB) has noted that credit report fees have increased significantly in recent years, placing more financial strain on borrowers during the homebuying process. By opening the door to VantageScore, regulators hope to bring more transparency, reduce fees, and broaden access to credit.

The shift also reflects the evolution of credit scoring itself. VantageScore 4.0 includes data from which some borrowers — especially younger consumers or those with limited traditional credit — might benefit. For example, rent, utility, and even telecom payment histories can be factored into a VantageScore if those payments are reported to the credit bureaus. This inclusion could prove helpful for many military families who relocate frequently and may have limited credit histories.

VantageScore also differs from FICO in that it can assign a credit score within one month, whereas FICO typically requires at least six months. This shorter time frame can be a major advantage for servicemembers just beginning to build credit or those returning from deployments where credit use may have been limited. 

Additionally, VantageScore’s approach to multiple loan inquiries is more forgiving, meaning that if you shop around for the best mortgage rate, the impact on your score may be less severe than it would be under FICO’s model.

Related: Does My Credit Score Impact My Interest Rate?

Credit Scores Matter, Even for VA Home Loans

Despite all these updates, it’s important to note that the VA does not require a minimum borrower credit score to qualify. However, most VA-approved lenders impose their own standards, called overlays, often requiring a minimum score in the 580 to 620 range. This means that even if you’re applying for a VA Home Loan, your credit score still plays a critical role in whether you qualify and what terms you receive.

For military homebuyers considering conventional or FHA financing, credit scores become even more influential. Your score can determine not just loan approval but also your interest rate, down payment requirement, and whether you must pay for private mortgage insurance. A small difference in credit score can translate into thousands of dollars in savings or additional costs over the life of a mortgage.

Related: Will My Credit Be Dinged When I Apply for a Mortgage?

Opening Doors to Homeownership

So, what does all this mean for Armed Forces Mutual Members? Most importantly, it signals a shift in how your financial history might be evaluated and opens the door for new ways to demonstrate your creditworthiness. If your rent and utilities are consistently paid on time and reported to the major credit bureaus, your VantageScore may be higher than your FICO score, improving your odds of securing favorable loan terms.

If you’re planning to buy a home, understanding your FICO and VantageScore credit ratings is more important than ever. Many online tools allow you to monitor both, and seeing the full picture can give you insight into where you stand and how different lenders might view your application.

You may also want to take steps to ensure your rent and utility payments are being reported, since this data can now potentially strengthen your credit profile. ​​To ensure your utility payments are reported to credit bureaus, you can utilize third-party services like Experian Boost, UltraFICO or eCredible. These services allow you to link your bank accounts or utility accounts and report your on-time payments to credit bureaus, potentially improving your credit score. You can also explore services like SimpleBills that allow you to report utility payments to Equifax for a monthly fee. 

The bottom line is this: As lenders begin to incorporate VantageScore 4.0 into their processes, it’s essential to stay informed and be proactive. Talk to an AAFMAA Mortgage Services LLC (AMS) Military Mortgage Advisor, a licensed mortgage loan originator, about which score will help you qualify and receive the best loan terms possible. Be prepared to discuss your complete financial picture, especially if you have alternative data such as rent or utility payment history that could enhance your application.

We’re Here to Help

Whether you’re thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AMS Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.

Ensuring Armed Forces Mutual Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!