Biden-Era Policy Could Set The Stage For Another 2008-Style Housing Disaster

A lingering Biden-era credit scoring policy is quietly expanding access to credit, which could pave the groundwork for another 2008-style housing crisis.

VantageScore is a nontraditional credit scoring system that makes it easier for people with limited credit histories and certain kinds of debt to establish a credit score. Lenders can then use that data to extend mortgage eligibility to riskier borrowers, and potentially illegal aliens.

VantageScore allows lenders to factor in data like rent, utility, and phone payments in evaluating mortgage applicants, while ignoring risk factors like medical debt and paid collections. The Federal Housing Finance Agency (FHFA) authorized VantageScore for use by Fannie Mae and Freddie Mac — to go along with FICO — in July 2025. (RELATED: LEIF LARSON: Protect Housing Market From Biden Era Credit Policies)

A coalition of 35 advocacy organizations urged the FHFA in January to proceed cautiously with any updates to mortgage credit score requirements, warning that changes could increase the likelihood of another taxpayer-funded housing bailout, according to a Fox Business report.

Inexpensive credit and lax lending policies previously led to an inflated housing bubble, ultimately resulting in the 2008 recession.

The VantageScore model was originally validated by the Biden administration-led FHFA under then-Director Sandra Thompson in October 2022 as part of a broader push for a “more inclusive approach to evaluating borrowers,” according to a press release.

The model is marketed to expand credit access, including to recent immigrants and those without traditional credit histories, according to VantageScore’s website.

Illegal Immigration under Biden severely hurt the Housing Market and the ability for young people to buy homes. This is not talked about enough!!!

— Pulte (@pulte) November 9, 2025

A FHFA spokesperson accused the Daily Caller of being paid by “Special Interest[s]” when asked if they were reconsidering the use of VantageScore 4.0 or limiting its implementation in light of Trump-era Federal Housing Administration (FHA) restrictions.

“This article is likely a paid article funded by a Special Interest because Fannie and Freddie do not provide loans to illegal immigrants,” the spokesperson wrote to the Caller.

The Caller subsequently asked if VantageScore could enable individuals with limited or poor credit histories to access federally backed financing.

“Contrary to the false and defamatory statements by this paid author, VantageScore is not used at FHFA, Fannie, or Freddie to give loans to illegal immigrants,” the spokesperson told the Caller. (RELATED: Is Trump Blaming The Wrong Culprit For Unaffordable Houses? )

In July 2025, FHFA Director Bill Pulte expanded VantageScore’s use by allowing lenders to use either traditional FICO scores or VantageScore 4.0, even as FHA loan eligibility rules were later tightened under the Department of Housing and Urban Development (HUD). 

The Biden administration, according to Trump’s HUD, expanded eligibility for FHA loans to certain nonpermanent residents, a move opponents argue broadened access in ways that encompassed those in the country illegally.

Mark Krikorian, executive director of the Center for Immigration Studies, told the Daily Caller that potentially incorporating illegal immigrants into credit scoring conflicts with U.S. immigration enforcement goals and effectively expands mortgage eligibility to a broader pool of borrowers with thin or no traditional credit histories.

“Being an illegal immigrant should be a risk factor in your credit score, if you were to have one. In other words, it’s more likely you’re not going to be able to pay your bills because you could get arrested,” Krikorian said.

🚨 BREAKING: Arizona House Commerce Committee passes SB1421 banning illegal immigrants from banking and sending money abroad, closing ITIN loopholes.

Blocks accounts, loans, transfers without proof of legal status and forces remittance companies verify.pic.twitter.com/bIQ5X0n0jZ

— Derrick Evans (@DerrickEvans4WV) March 25, 2026

“So, the idea of making it easier for illegal immigrants to get credit scores at all, but mortgages as well, is directly contrary to the broader goal of immigration policy, which is to make it as difficult as possible to live here as an illegal alien — to make illegals unemployable, unbankable, and unlendable, I guess. Anything that goes in the other direction is, by definition, helping illegal immigrants stay here,” he continued.

The Trump administration’s HUD restricted FHA-insured mortgages to U.S. citizens and lawful permanent residents in March 2025, the National Review first reported. However, the FHFA’s endorsement of VantageScore could open up other financial problems, critics say.

The massive influx of illegal immigration under Biden has already strained the housing market, driving up prices and rents while making it harder for young Americans to buy homes. (RELATED: Surge Of Illegal Immigration Under Biden Is Jacking Up Rents And Housing Prices, Experts Say)

Krikorian warns that relying heavily on alternative data risks mispricing borrower risk, setting the stage for another 2008-style crisis with widespread defaults and taxpayer bailouts.

“The point of risk analysis is to model whether a person is actually likely to pay their loan back, and people who are in that business have a pretty good way of making those decisions. Sometimes they’re going to be wrong, but if they’re wrong and they pay the price, such is life,” Krikorian added. “If they’re wrong and taxpayers pay the price, that’s unacceptable. This potentially sets up a replay of the housing crisis from almost 20 years ago.”

The Caller reached out to VantageScore for comment but did not receive a response in time for publication.