For decades, millions of American families, disproportionately Black, Latino and immigrant households, have been locked out of homeownership — not just because they couldn’t afford it, but because the credit system was never built to serve them.
In April, the federal government took a meaningful step toward fixing that, announcing that the agencies backing most American mortgages would begin accepting alternative credit scores that capture rent and utility payment history.
It’s real progress, and it’s not enough. At Candide Group, where we support affordable homeownership and community wealth-building alongside families and foundations who want their money working for social justice, we’ve worked for over a decade to address root problems and create real opportunity. This announcement clarifies exactly why that work matters more than ever.
Credit access: an overlooked piece of the housing puzzle
Homeownership has historically served as the primary vehicle for wealth building in America. With home equity comprising nearly two-thirds of middle-income household wealth, the gap between who gets to own and who doesn’t is inseparable from the racial wealth gap itself.
Only 44% of Black families and 51% of Latino families own homes, compared to 72% of white families, a disparity rooted not just in income, but in a credit system designed in the 1980s that treats years of on-time rent and utility payments as if they don’t exist. Tens of millions of Americans are effectively invisible to the credit system, most of them from communities that have demonstrated financial reliability for decades in ways the conventional mortgage market has simply not counted.
This didn’t just happen out of the blue. It’s the legacy of exclusionary underwriting that persists structurally even after many explicitly discriminatory policies were outlawed. Closing the homeownership gap requires not just better policy, but capital willing to work differently.
What the government just did (and why it matters)
In April, officials from the Federal Housing Finance Agency (FHFA) and Housing and Urban Development (HUD) announced a shift in mortgage credit evaluation. Fannie Mae, Freddie Mac and Ginnie Mae — which back a majority of American mortgages — would begin accepting VantageScore 4.0 and FICO 10T (more advanced credit scoring models) alongside the traditional FICO score that has dominated underwriting for decades.
The administration called it historic, claiming it would affect tens of millions of people. While a little or a lot of exaggeration is par for the Mar-a-Lago course, this is certainly a meaningful step. Unlike Classic FICO, which captures a single snapshot of credit behavior, VantageScore 4.0 uses up to two years of trended payment data and incorporates rental and utility payment history. That’s a real improvement, but it is still an incomplete solution.
Why doesn’t it solve the deeper problem
The announcement leaves two deeper problems largely untouched and reminds us of a third that no scoring model change can fix.
- The data pipeline is still empty for the households that need it most. Newly scorable is not the same as mortgage-ready. The households furthest from the mortgage market aren’t credit invisible because the scoring model couldn’t process their data; they’re invisible because their payment behavior was never reported to the bureaus in the first place. Switching from Classic FICO to VantageScore 4.0 doesn’t fix an empty data pipeline; filling it does, and that’s where the forward-looking opportunity lives.
- Not all lenders will adopt this. Borrowers have no ability to choose which scoring model is applied to them; lenders do. And while the Government Sponsored Enterprises, or GSEs, have introduced separate pricing grids (risk-based charges so lenders know how much to charge) for VantageScore 4.0, that creates its own challenges. Lenders can now choose whichever model produces more favorable pricing for each loan, a dynamic that could inadvertently push fee increases back onto the borrowers this announcement was meant to serve. Without capital incentives pushing lenders toward alternative underwriting, the eligibility change is largely theoretical for the households that need it most.
- A better credit score doesn’t make housing affordable. Getting newly scorable households across the mortgage eligibility threshold will deliver households into a market where prices and rates remain the dominant barrier. Credit access removes one structural obstacle, but only for families who actually have a path to ownership. This doesn’t diminish the announcement, but rather it maps where further progress (and capital) is needed.
What actually goes further
The most important thing the FHFA announcement does is create a forward-looking opportunity for renters who start building bureau-reported payment history today. For a renter who has been paying on time for two or more years, the path from credit invisible to mortgage-ready is shorter than most people realize.
Esusu is one of the clearest examples of what this looks like at scale. The platform powers over 5 million rental units, reaching 12 million renters across all 50 states, and reports verified on-time rent payments directly to all three major credit bureaus, including up to 24 months of past payment history retroactively. In 2025 alone, Esusu helped more than 270,000 renters establish a credit score for the first time, a 34% increase year over year, with an average 53-point score increase. A renter enrolling in Esusu today will be a mortgage candidate in 18 to 24 months, not because the regulatory goalposts moved, but because the data pipeline is being actively built beneath them.
But the data infrastructure isn’t enough. Community Development Finance Institutions, or CDFIs, and community banks have long operated at the frontier of alternative credit underwriting and demonstrated through years of practice that innovative underwriting approaches to underserved borrowers perform as well as (and in some cases better than) conventional FICO-based models. The first-mover role matters: these institutions have built the proof of concept that the broader market is only now beginning to acknowledge. But their ability to scale it has always been constrained not by the quality of their models, but by balance sheet capacity. And that’s where patient impact capital changes the equation.
When an impact investor takes a first-loss position behind a CDFI portfolio of alternative-underwritten mortgages, it absorbs the downside risk that limits origination volume and generates the performance data that forces the broader capital market to take notice.
The goal isn’t to subsidize a path for traditional capital to reap the enhanced returns (like the group project kid who arrives just for the presentation) but rather to validate models and expand access to communities that mission capital alone could never fully reach. At Candide, this is central to how we think about housing investment: not just whether a model is right, but whether the capital structure gives it room to work without compromising its mission.
The larger opportunity
The racial homeownership gap is a credit gap built on decades of exclusionary underwriting. The recent announcement is a meaningful correction to part of that history. What it can’t do is reach the households whose payment behavior has never touched the credit system, or change the capital incentives that determine whether lenders actually adopt new models in practice, or regulate prices in a market that too often forgets housing is a basic human right.
At Candide, our “home and place” thesis starts from a simple conviction: Vibrant communities require accessible ownership, and speculative capital has historically extracted from the communities we’re trying to strengthen. Data platforms, patient first-loss capital and mission lenders willing to underwrite what the bureaus haven’t recorded are key tools to make ownership more accessible for the families furthest from it.
The government just took a step in this direction. The question is whether capital moves faster than the next regulatory cycle. Based on what we’ve seen work on the ground, there’s no reason to wait.
Kyle Ruane is the director of home and place at Candide Group.
Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.
