How the New Credit Scoring Models Can Help Californians Qualify for a Mortgage in 2026

Understanding the New Credit Scoring Models

Buying a home in California is a major milestone—and often a challenge. Sky-high home prices, competitive markets, and strict lending criteria have made mortgage approval difficult for many people, especially first-time buyers. But starting in 2026, new credit scoring models are set to change that.

These updated models, including VantageScore 4.0 and FICO 10T, give lenders better tools to evaluate borrower risk. More importantly, they offer Californians new ways to qualify for a mortgage, especially those with limited credit history or nontraditional financial profiles.

At LBC Mortgage, we’re committed to helping clients understand and benefit from these changes. Here's what you need to know about the new scoring models and how they can work in your favor.

From Classic FICO to Smarter Scoring

For decades, most mortgage lenders used Classic FICO, a model developed in the 1980s. While reliable, it was limited in how it evaluated borrowers. Classic FICO required six months of credit history and looked mainly at traditional credit products like credit cards and installment loans.

That approach left out millions of responsible consumers—renters, gig workers, and others who don’t rely on credit but still manage their money well.

To solve this, regulators are introducing new models that more accurately reflect a borrower's financial behavior. These include:

• VantageScore 4.0, which allows scoring with as little as one month of credit history
• FICO 10T, which includes trended data over time for a more complete credit picture

Both models were approved by the Federal Housing Finance Agency (FHFA) for use in mortgage underwriting for loans backed by Fannie Mae and Freddie Mac. Lenders can begin using them in 2025, with full implementation expected in 2026.

What's Different About VantageScore 4.0 and FICO 10T?

VantageScore 4.0 uses data from all three major credit bureaus—Experian, TransUnion, and Equifax—and emphasizes recent behavior. It also includes alternative payment data like rent, utilities, and phone bills, making it more inclusive.

FICO 10T improves on previous FICO versions by using trended data. Instead of just looking at your credit balance today, it evaluates your credit habits over time. This allows lenders to distinguish between someone who is consistently paying off debt and someone who is only temporarily managing their balances.

These updates lead to fairer, more accurate credit scores and help more borrowers qualify for a mortgage.

Why This Matters for California Homebuyers

California’s High Housing Costs Increase the Need for Strong Credit

In cities like Los Angeles, San Francisco, and San Diego, home prices remain well above the national average. That means even modest homes often require large loan amounts—and stricter underwriting. In high-cost markets, small changes to your credit profile can make a big difference in your ability to qualify and the interest rate you receive.

The new models allow lenders to see a fuller, more accurate picture of your financial responsibility. If you’ve been paying rent on time for years but haven’t built a long credit history, VantageScore 4.0 can help reflect that in your score.

This gives Californians more flexibility and improves access to mortgage loans in an otherwise tough environment.

Helping First-Time and Underserved Buyers

One of the biggest advantages of the new credit scoring models is how they support people who were previously underserved by traditional credit systems.

That includes:

• Young professionals with limited credit
• Immigrants without long U.S. credit histories
• Freelancers and gig workers who don’t use traditional credit products
• Long-time renters who pay bills on time but aren’t “scorable” under old models

With VantageScore 4.0, even one active account can generate a score. It also incorporates on-time rent and utility payments, which can make a huge difference for buyers who have avoided debt but still demonstrate financial reliability.

At LBC Mortgage, we work with borrowers in these categories every day. These new tools help us advocate for more inclusive lending decisions and open the door to homeownership for more Californians.

Streamlined Credit Reporting Means Lower Costs

Two-Bureau Credit Pulls Can Save You Money

Previously, mortgage lenders were required to pull credit reports from all three bureaus—Equifax, Experian, and TransUnion. That could mean extra costs for borrowers, especially if multiple pulls were required.

As part of the new model rollout, lenders now have the option to use just two credit bureaus instead of three. This may slightly reduce the cost of a mortgage application and help streamline the process.

While the savings might not be massive, in a state like California where closing costs already run high, every dollar counts. We help our clients understand how this change can reduce upfront fees and make mortgage approval more efficient.

Lenders Have More Options—And So Do You

With more approved scoring models, lenders have greater flexibility in how they evaluate borrowers. Some may choose VantageScore 4.0, while others may use FICO 10T. This introduces competition and gives you more pathways to qualify.

At LBC Mortgage, we match clients with lenders who use the scoring model that best fits their financial background. If your rent history or consistent bill payments could boost your score under VantageScore 4.0, we make sure you’re applying with a lender who sees that value.

A Better Mortgage Landscape for California in 2026

The introduction of VantageScore 4.0 and FICO 10T marks a major improvement in how credit is evaluated. These models don’t just benefit lenders—they open the door for more Californians to qualify for a mortgage, particularly those who’ve been locked out under the old rules.

By incorporating alternative data, using trended insights, and enabling more inclusive scoring, the mortgage process becomes more accessible and fair.

At LBC Mortgage, we’re here to help you take full advantage of these changes. Whether you’re a first-time homebuyer in Los Angeles or a seasoned investor in the Bay Area, we’re ready to guide you through the evolving credit landscape and secure the best possible mortgage for your needs.