I had a borrower call me last week asking if $156 for a joint credit report was really what it costs now.
Yes. That’s what I told him. And frankly, it made me mad all over again.
After more than 20 years in this business, I’ve watched credit report costs go from reasonable to absolutely ridiculous. We used to pay $15 to $30 for a tri-merge report. Now we’re talking $80 to over $150 in many cases. The vendor feeding off our industry keeps raising prices while we’re all losing money.
But something big just happened. FHFA Director Bill Pulte announced that Fannie Mae and Freddie Mac will now allow lenders to use VantageScore 4.0 alongside the traditional FICO scores we’ve been forced to use for decades.
This is the first real competition FICO has faced in the mortgage space. Ever.
And honestly, it’s about time.
Key Takeaways
Here’s what every borrower needs to understand about these credit scoring changes:
FICO’s monopoly is finally broken. For the first time in 30 years, lenders can choose between FICO Classic and VantageScore 4.0 for conventional mortgages. This ends FICO’s ability to raise prices without competition.
VantageScore 4.0 could help you qualify or get better rates. If you’ve been paying rent, utilities, or cell phone bills on time but have limited credit card history, this new scoring model captures that payment data. Veterans and first-time buyers especially might see higher scores.
Credit report costs have gotten ridiculous, but competition might help. We’ve gone from $15-30 tri-merge reports to $80-100+ in just a few years. FICO raised their fees 41% for 2025 alone. Real competition could finally pressure these costs down.
Not all lenders will switch immediately. Fannie and Freddie still need to update their systems before they can accept VantageScore 4.0 loans. Larger lenders will probably adopt it faster, so shop around to find ones using the scoring model that works best for you.
Your traditional credit management still matters most. Whether it’s FICO or VantageScore, paying bills on time and keeping balances low helps both scores. These changes create more opportunities, but don’t replace good credit habits.
What Just Changed with Mortgage Credit Score Changes 2025
On July 8th, FHFA Director Bill Pulte posted on social media that Fannie Mae and Freddie Mac would immediately allow lenders to use VantageScore 4.0 for mortgage underwriting. Not in a few years. Not after more studies. Immediately.
This broke FICO’s near-total monopoly on mortgage credit scoring.
For the past 30 years, if you wanted a conventional mortgage that Fannie or Freddie would buy, your lender had to use FICO’s Classic scoring model. Period. No alternatives. No competition. No choice.
That meant FICO could basically charge whatever they wanted. And they did.
The announcement came with one important detail. Lenders will still pull tri-merge reports from all three credit bureaus. So no cost savings there yet. But they can now choose between FICO Classic scores or VantageScore 4.0 scores.
This is the Credit Score Competition Act that was signed into law back in 2018 finally getting implemented. Took seven years, but here we are.
Why FICO Has Been Able to Charge Whatever They Want
Let me tell you exactly why this matters for borrowers.
FICO has had what amounts to a monopoly on mortgage credit scoring. When the government requires something and there’s only one provider, that provider tends to get comfortable with pricing.
Very comfortable.
Here’s what’s happened to FICO pricing just in the past few years. In 2023, they implemented a tier-based structure that increased prices for some lenders by up to 400%. Four hundred percent. Then in 2024, they moved to a fixed price of $3.50 per score. Now for 2025, they’ve raised it to $4.95 per score.
That’s a 41% increase from last year alone.
Do the math on a tri-merge report. That’s $14.85 just for the FICO portion. Then the credit bureaus add their markup. Then the resellers add theirs. By the time it gets to your lender, that $156 credit report I mentioned isn’t looking so crazy anymore.
And guess who ultimately pays for all this? You do. Either directly as a borrower cost or indirectly through higher lender fees.
The worst part is they could do this because there was no alternative. Government required FICO scores for most mortgages. FICO was the only provider. Classic monopoly pricing.
What VantageScore 4.0 Actually Does Differently
VantageScore 4.0 isn’t just another credit score. It does some things that could actually help borrowers, especially younger borrowers and veterans.
Alternative Data Inclusion
VantageScore 4.0’s incorporation of alternative data sources like rent, utility, and telecommunications payments sets it apart. If you’ve been paying rent on time for years but never had credit cards, VantageScore 4.0 might give you a better score than traditional FICO.
Trended Data Analysis
Instead of just looking at a snapshot of your credit on one day, it can see trends over 24 months of credit history. If you’ve been improving your credit management, that shows up.
Medical Collections Treatment
VantageScore 4.0 treats medical and non-medical collection accounts differently and ignores medical collections when calculating your score.
For military families, this could be particularly useful. Young service members often have limited credit history but strong payment records on things like base housing and utilities. VantageScore 4.0 captures that.
According to VantageScore, their model can score 33 million more people than traditional models. That’s potentially 33 million people who might qualify for mortgages they couldn’t get before.
The National Association of Realtors called this “a major step toward a more accurate and equitable mortgage underwriting process”. When the realtors are excited about something that might help their clients qualify, you know it’s probably good for borrowers.
How FICO Fired Back with Their White Paper
FICO didn’t take this lying down. Three days after Pulte’s announcement, they released a white paper claiming their FICO Score 10T model “decisively outperforms” VantageScore 4.0 in predicting mortgage defaults.
Their main argument was that FICO Score 10T identifies 18% more defaulters in the lowest credit score range compared to just 3.4% for VantageScore 4.0. That’s a five-to-one advantage, according to FICO’s analysis.
They also claimed VantageScore 4.0 actually penalizes people who have never owned a home by including mortgage-specific variables in their scoring. Basically saying VantageScore tells renters they need a mortgage to get a mortgage.
That’s an interesting point. But here’s the thing about this white paper timing. It came out right after FICO lost their monopoly position. Convenient.
Bill Pulte himself responded on social media saying he was “glad to see FICO and VantageScore competing today”. “This is good. We need COMPETITION. I believe there will be more than 2 credit scores, with high predictability, and low costs.”
That last part about low costs is what I care about most.
Real Impact on Borrowers and Credit Report Costs
Look, the immediate impact isn’t going to be dramatic cost savings on credit reports. Lenders still have to pull tri-merge reports from all three credit bureaus. That’s still the same base cost.
But competition usually leads to lower prices over time. If VantageScore can provide scoring at a lower cost than FICO, that pressure might force FICO to stop their annual price increases.
Maybe even reverse them.
The Community Home Lenders of America called FICO’s latest price increase a “slap in the face to consumers” and proof that FICO is “a monopoly, pure and simple”. Those aren’t my words, but I agree with the sentiment.
Competition forces everyone to provide better value. FICO has been raising prices while the mortgage industry has been losing money for two years straight. That doesn’t feel like a partnership to me.
Potential Benefits for Borrowers
For borrowers, the bigger potential impact is qualification. If VantageScore 4.0 gives you a higher credit score than FICO, that could mean:
- Better interest rates
- Qualification for conventional loans instead of FHA loans
- Lower mortgage insurance costs
- Access to more loan programs
Even a 15-20 point score difference can move you into a better pricing tier. That’s real money over the life of a 30-year mortgage.
What This Means for Different Types of Borrowers
Different borrowers will see different impacts from these mortgage credit score changes in 2025.
Veterans and Military Families
Veterans and military families might benefit the most. Many service members have solid payment histories on things like base housing and utilities, but limited traditional credit history. VantageScore 4.0’s inclusion of alternative data sources like rent, utility, and telecommunications payments could help them qualify or get better rates.
First-Time Homebuyers
First-time homebuyers who have been renting could see improvements. If you’ve been paying rent, utilities, and cell phone bills on time for years, VantageScore 4.0 captures that payment history in ways traditional FICO doesn’t.
Young Borrowers
Young borrowers with thin credit files might find new opportunities. Instead of being penalized for not having a long credit history, they might get credit for the payment history they do have.
People with Medical Debt
People with medical debt could see score improvements. VantageScore 4.0 treats medical collections differently and ignores medical collections when calculating your score.
Established Credit Borrowers
On the flip side, borrowers with established credit histories might not see much difference. If you’ve got a long credit history with credit cards and previous loans, FICO Classic might still give you the best score.
The key is that borrowers now have options. Lenders can run both scoring models and use whichever one works better for the borrower.
That’s how competition is supposed to work.
The Ongoing Battle Over FICO Score 10T
Here’s where things get complicated. FICO Score 10T was supposed to be implemented alongside VantageScore 4.0. Both models were approved by FHFA back in 2022. Both were supposed to replace the old Classic FICO model by the fourth quarter of 2025.
But Pulte’s announcement only mentioned VantageScore 4.0. FICO Score 10T got left out.
FHFA later clarified that FICO Score 10T “remains an approved credit score model and is planned for future use”. But they didn’t give a timeline.
This creates an interesting situation. FICO is pushing their newer, supposedly better model while also defending their pricing on the older model that lenders are still required to use.
Meanwhile, VantageScore gets to position itself as the innovative alternative that’s available right now.
I suspect FICO’s pricing strategy may have backfired on them. When you keep raising prices on a required product, regulators start looking for alternatives.
What to Expect as a Borrower Right Now
If you’re getting ready to apply for a mortgage, here’s what you need to know about these credit score changes.
Implementation Timeline
First, not all lenders will immediately start using VantageScore 4.0. Fannie Mae and Freddie Mac can’t accept loans evaluated using VantageScore 4.0 until they update their selling guides. Larger lenders will probably adopt it faster than smaller ones.
Scoring Model Transparency
Second, you won’t necessarily know which scoring model your lender is using unless you ask. Some lenders might run both and use whichever gives you a better result. Others might stick with FICO Classic until they’re required to change.
Credit Management Fundamentals
Third, these changes don’t eliminate the importance of traditional credit management. Paying bills on time, keeping credit card balances low, and maintaining a good credit history still matter regardless of which scoring model is used.
Alternative Payment Data
Fourth, if you have alternative payment data like rent and utility payments, make sure your lender knows about it. Some lenders can manually verify these payments even if they don’t show up on your credit report.
Shopping Around
Finally, shop around. Different lenders might use different scoring models, and that could mean different qualification decisions or interest rates for you.
The mortgage market is competitive right now. Use that to your advantage.
Frequently Asked Questions
What credit scoring models are changing in 2025?
FHFA has allowed Fannie Mae and Freddie Mac to accept VantageScore 4.0 alongside the traditional FICO Classic model. This breaks FICO's monopoly on mortgage credit scoring for the first time in 30 years.
How will VantageScore 4.0 affect my mortgage application?
VantageScore 4.0 incorporates alternative data sources like rent, utility, and telecommunications payments, which could help borrowers with limited traditional credit history qualify for better rates or loan programs.
Will credit report costs go down with these changes?
While immediate cost savings are unlikely since lenders still must pull tri-merge reports from all three credit bureaus, competition typically leads to lower prices over time as companies compete for market share.
When will lenders start using VantageScore 4.0?
Implementation depends on when Fannie Mae and Freddie Mac update their selling guides. Larger lenders will likely adopt the new scoring model faster than smaller ones.
What happened to FICO Score 10T?
FICO Score 10T remains approved but FHFA hasn't provided a timeline for implementation. Only VantageScore 4.0 was included in the recent announcement.
How much have credit report costs increased recently?
FICO raised its wholesale royalty from $3.50 to $4.95 per score for 2025, a 41% increase. Mortgage executives anticipate a minimum 20% increase in total credit reporting costs for 2025.
Who benefits most from VantageScore 4.0?
Veterans, military families, first-time homebuyers, young borrowers with thin credit files, and people with medical debt may see the biggest improvements due to VantageScore 4.0's treatment of alternative data and medical collections.
Will my current FICO score still matter?
Yes. Lenders can choose between Classic FICO or VantageScore 4.0 for loans sold to the Enterprises. Many lenders may run both and use whichever gives you better results.
My Take After 20 Years in This Business
I’m honestly excited about this competition, and here’s why.
For too long, we’ve been at the mercy of a single company that could raise prices annually with no accountability. That’s not how markets are supposed to work. Competition breeds innovation and better pricing.
The mortgage industry has been hammered by low volume and compressed margins for the past couple years. We need our vendor partners to share some of that pain, not keep gouging us with higher costs that ultimately get passed to borrowers.
This announcement by Pulte shows he understands that competition is the best way to drive down costs and improve products. That’s exactly what the mortgage industry needs right now.
Will This Solve Everything?
Will this immediately solve the credit report cost problem? Probably not. But it’s a start.
Will some borrowers get better scores with VantageScore 4.0? Absolutely. Especially younger borrowers, military families, and people with non-traditional credit histories.
Will this force FICO to be more competitive on pricing? Time will tell. But monopolies don’t usually give up pricing power voluntarily.
The Real Test
The real test will be whether lenders actually adopt VantageScore 4.0 in meaningful numbers. If they do, we might finally see some relief on credit reporting costs and better access to credit for deserving borrowers.
After 20 years of watching FICO raise prices while everyone else in the mortgage industry struggled, I’m ready for some competition.
It’s about time.
About The Author - Jason Skinrood
