Remember when the whole banking system almost crashed when Bill Clinton's sub-prime mortgage disaster caught up to us in 2008?
It turned out that loaning hundreds of thousands to people with shoddy credit history wasn't sustainable, and you'd think we would have learned that lesson.
Yahoo Finance reports that starting in 2026, our two lending giants are once more relaxing their lending standards below a credit score of 620.
Fannie Mae eliminated its minimum credit score requirement on Nov. 15, 2025, as noted in an update to its Selling Guide.
‘Previously we used a minimum credit score to determine whether a borrower was eligible for a credit risk assessment,' the government-sponsored enterprise said in a statement. Fannie Mae added that the update would ensure risk analysis is ‘agnostic of third-party credit scores.'
The GSE also said that risk decisions would be based on ‘a broad set of factors, such as borrower reserves, debt levels, property characteristics, and loan purpose.'
Since Freddie Mac and Fannie Mae provide capital to the mortgage industry for more than half the mortgages in the U.S., the credit bureaus are also moving away from a traditional credit requirement.
Julie May, vice president and general manager of B2B scores at FICO, wrote in a web post that ‘FICO Score 10T incorporates advanced modeling techniques and utilizes comprehensive consumer data, including trended credit information and rental payment history, to give lenders a deeper, more nuanced understanding of borrower behavior over time.'
May added that the credit profiles would ‘expand access to credit for traditionally underserved groups such as first-time homebuyers, young adults, and renters.'
This is all apparently a ploy to get more of these "subprime" groups into purchased homes.
Maybe the plan is to crash the market to reset home prices? 😭
As of right now, the government isn't twisting underwriters' arms to sign off on a low credit score for a loan like Clinton did, which is good because the banks' requirements for how much cash they have to have on hand has also been reduced.
Here's hoping history doesn't repeat itself.
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