Major Credit Rule Change Should Help New Yorkers Buy Homes

Paying your rent on time may now improve a homebuyer's credit score in New York.

New Yorkers hoping to buy a home with a history of on-time rent payments will soon find it easier to qualify for a mortgage.

Historic Move By Fannie Mae and Freddie Mac

Federal mortgage buyers Fannie Mae and Freddie Mac are now allowing credit scores based on rent and utility payments to make it easier to qualify for a mortgage.

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This is a major step toward making homeownership more accessible for "credit invisible" or "thin-file" borrowers, officials say.

U.S. Federal Housing Finance Agency Director William Pulte, who's also the chairman of Fannie Mae and Freddie Mac, confirmed the news.

"If you pay your rent on time, you are more likely to pay your mortgage on time," Pulte said during a press conference. "For decades, our housing system ignored that simple fact, because your credit score would never count it. That's nonsense, because credit history should include rental history."

How the New Rules Work

Lenders can now use VantageScore 4.0 and FICO 10T, which incorporate rental and utility data. Lenders can then verify your history by looking at your credit report or by securely accessing your bank statements to find 12 consecutive months of rent payments.

The Federal Housing Administration is also adopting these changes in an effort to help more first-time and lower-wealth buyers qualify for insured mortgages.

Officials believe this change will help tens of millions of people, including young buyers.

It's also expected to help freelancers and gig workers who have a reliable income but lack a traditional credit history.

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