The government-sponsored mortgage investor Fannie Mae has eliminated minimum credit score requirements from its loan processing software, Desktop Underwriter (DU), for loans submitted through the system beginning Nov. 16.
Federal Housing Finance Agency (FHFA) Director Bill Pulte, whose agency regulates Fannie Mae and government-sponsored sibling Freddie Mac, described the change as a “process matter” in a Friday morning post on X.
The change to the official Fannie Mae Selling Guide means minimum credit score requirements of 620 for single-borrower loan files and minimum average credit score requirements of 620 for multiborrower files will no longer apply for Fannie-eligible loans.
“Big deal for consumers. Small or nothing deal for underwriting,” Pulte wrote, adding that “to ensure two scores can be used and not just one, we eliminated requirement for FICO.”
The Community Home Lenders of America, an advocacy group representing small and midsize lenders, applauded the move in a statement shared with Scotsman Guide.
“Today’s action by Director Pulte is yet another blow he has struck to start to break up the monopoly FICO has had on credit scoring,” said Rob Zimmer, head of external affairs for CHLA, noting that the group had pushed for this change in a letter sent to Pulte in July.
Controversy over Fannie and Freddie’s credit score requirements for mortgage loan underwriting has simmered in the industry for years.
Lenders have bemoaned increased costs for pulling credit reports from the three nationwide consumer credit bureaus — TransUnion, Experian and Equifax — as well as business lost to credit reporting blind spots.
At the same time, the broader financial market has complained of a lack of innovation around alternative credit verification due to the concentrated market power and perceived anticompetitive practices of credit scoring firm Fair Isaac Corp., better known as FICO.
In 2006, TransUnion, Experian and Equifax sought to break FICO’s hold on credit scoring when they jointly developed an alternative, VantageScore. But Classic FICO remained the only approved scoring model for Fannie- and Freddie-eligible loans until July, when Pulte announced that lenders could also submit files using the VantageScore 4.0 model, which notably incorporates rental payment history into assessing creditworthiness.
The formal push to reform credit scoring began in 2018 with the passage of the Credit Score Competition Act, signed into law by President Donald Trump during his first administration.
The FHFA announced in October 2022, during the tenure of former agency head Sandra L. Thompson, that lenders would be permitted to submit loan files using tri-merge or bi-merge credit score models — in which credit reports from three or two of the reporting agencies are used. But the implementation of that policy change was put on indefinite hold in January 2025, shortly after reports surfaced that Thompson intended to resign.
In a July interview with Scotsman Guide, Pulte said he hadn’t ruled out the possibility of a bi-merge model in the future, but “we are just pausing it for the interim, keeping tri-merge just to make things as easy as possible for everybody.”
Pulte’s move to erase “FICO” from the Selling Guide is not only geared to increase competition within the credit reporting industry, but also to expand the universe of Fannie-eligible mortgage borrowers with no-credit, low-credit or alternative credit histories. The changes coincided with updates severing nontraditional credit histories and homebuyer education requirements from credit scores.
Fannie’s DU platform will now prompt lenders to establish a nontraditional credit history or complete homebuyer education when a given loan file has no borrower with “at least one credit account or installment account reported on their credit report.”
