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The Asian Real Estate Association of America, soon to celebrate its 20th anniversary with more than 17,000 members, is applauding The Federal Housing Finance Agency (FHFA) for validating and approving the use of both the FICO 10T credit score model and the VantageScore 4.0 credit score model for use by Fannie Mae and Freddie Mac.

AREAA, since its 2003 inception, has advocated for years to have alternative forms of credit outside of traditional FICO scores be recognized by lending institutions. 

“We are absolutely thrilled that FHFA, along with Fannie Mae and Freddie Mac, will now utilize a new model in showcasing the financial stability of potential homebuyers that includes rent, utility, and telecom payment histories,” said AREAA President Tim Hur. “We have stated for years that one of the barriers to homeownership for so many in the AANHPI (Asian American, Native Hawaiian, Pacific Islander) community is the inability to develop a credit history along with a cultural aversion to debt. Therefore, credit cards may not be the norm thus traditional FICO scores do not paint a clear picture of creditworthiness. We continued to share that timely rent payment, along with phone, cable, gas, and electricity bills, can show the same thing and be more in line with cultural norms. This is a major step in the right direction of increasing AANHPI homeownership.”

Hur pointed out that despite the AANHPI community having more than 1.6 million loans closed in 2021, the U.S. Census reports that the AANHPI  community has only a 61.1% homeownership rate. This is far behind the 74.6% rate for non-Hispanic whites and behind the national mark of 65.8%.

FHFA recently shared that the implementation of FICO 10T and VantageScore 4.0 credit score models replacing the Classic FICO will take several years. At that point, lenders who sell loans to Fannie Mae and Freddie Mac will be required to include both credit scores.

“Today's decision will benefit borrowers and the Enterprises, along with maintaining safety and soundness," said FHFA Director Sandra L. Thompson in an October 24 press release. “While implementing the newer credit score models is a significant change that will take time and require close coordination across the industry, the models bring improved accuracy and a more inclusive approach to evaluating borrowers."

 “We thank Director Thompson for her unwavering commitment to get this done. This is a big step for AREAA and the AANHPI community,” said AREAA Chief Executive Officer Hope Atuel. “We have spoken to the leadership at FHFA for years and documented countless examples of how difficult it is for immigrants to build up a credit score let alone first-generation immigrants who are credit resistant. We have shown how even the most affluent AANHPI people who did not have sufficient credit history were considered high risk and quoted higher rates or even denied loans. This occurred despite having not missed rental payments or traditional bills. It created an artificial barrier to homeownership that we are one step closer to eliminating.”

The AREAA Policy Committee, currently led by Vincent Ha, has been active in addressing the need for alternative credit models.


Founded in 2003, the Asian Real Estate Association of America (AREAA) is a national nonprofit trade organization with more than 18,000 members dedicated to improving the lives of the Asian American, Native Hawaiian and Pacific Islander (AANHPI) community through homeownership. Visit areaa.org for more information.


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