Rocket Mortgage announced today that it will soon default to VantageScore 4.0 instead of the FICO score it relied upon for years.
The switch is expected to take place in the fourth quarter of 2026 and all will apply to all eligible loan types.
This includes loans backed by Fannie Mae and Freddie Mac, along with VA loans.
It’s a big blow to FICO, which had no competition in the mortgage lending space until VantageScore jumped on the scene.
Rocket noted that the switch was driven by more borrowers being able to qualify, and at reduced credit scoring costs.
Rocket Mortgage Makes VantageScore Their Preferred Model
Step aside FICO. Rocket Mortgage, which is on track to be the nation’s largest mortgage lender once again, is switching to rival VantageScore.
Specifically, the Detroit-based lender said it will become the first mortgage lender to use VantageScore 4.0 as its “preferred credit scoring model” for all eligible loans.
This was determined after about four months of testing, in which the company found that VantageScore helped more clients qualify and “move forward in the mortgage process.”
In addition, the company said the switch has resulted in reduced credit scoring costs.
For what it’s worth, VantageScore credit scores apparently tend to come in higher than FICO scores.
In other words, it’s easier to qualify a borrower for a mortgage if their score is higher, all else equal.
Because of this, Fannie Mae and Freddie Mac initially applied a 20-point haircut on loans backed by VantageScore.
But according to a post today on X by FHFA chief Bill Pulte, there is now “ONE PRICING GRID with VantageScore joining the existing FICO Classic pricing grid.”
So it seems the haircut is gone and lenders can use VantageScore without applying the 20-point reduction.
This means a hypothetical borrower with a VantageScore that is say 40 points higher than FICO can enjoy better pricing and a lower mortgage rate.
And it simply might be easier to qualify for a mortgage with a higher credit score.
Which Loan Types Will Use VantageScore?
Initially, Rocket Mortgage will default to VS 4.0 for mortgages that will be delivered to Fannie Mae, Freddie Mac, known as conforming loans, along with VA loans.
The company said any other eligible mortgages will also get VS 4.0.
But for the time being, mortgages for investment properties and second homes, home equity loans, FHA loans, jumbo loans, and some other products will still use FICO scores.
This is partially because the FHA isn’t quite ready to accept VantageScore. However, once that changes it’ll likely switch to VantageScore as well.
In addition, Rocket Pro, the division of Rocket Mortgage that provides home loans through mortgage broker partners, will continue to accept both VantageScore and FICO scores from its clients.
Though if it turns out VS 4.0 is more beneficial and/or cheaper, I assume most brokers will opt for that over FICO.
Shares of FICO (NYSE:FICO) were down sharply in after-hours trading, falling about $80 per share or 10%.
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