Key facts
- Fannie Mae and Freddie Mac will accept VantageScore 4.0 for mortgage loans.
- The FHFA's decision aims to increase competition and make homeownership more accessible.
- The policy aligns with 2018 legislation to increase competition in credit scoring models.
- The FHFA plans to direct Fannie Mae and Freddie Mac to shift from “tri-merge” to “bi-merge” credit reports.
- The change could be announced by FHFA Director Bill Pulte at the Mortgage Bankers Association conference on Oct. 12.
The Federal Housing Finance Agency (FHFA) is directing Fannie Mae and Freddie Mac to accept VantageScore 4.0 credit scores for mortgage loans, in addition to the existing Classic FICO model. This policy shift, aimed at fostering competition and improving homeownership accessibility, is expected to be announced by FHFA Director Bill Pulte at the Mortgage Bankers Association conference on October 12.
In parallel, the FHFA plans to instruct the government-sponsored enterprises (GSEs) to transition from "tri-merge" to "bi-merge" credit reports for loan deliveries within weeks. This change would allow lenders to use data from only two of the three major credit bureaus: Equifax, Experian, and TransUnion.
Pulte has been vocal on social media about addressing what he described as overcharging by credit bureaus, stating, "Equifax, Experian, and TransUnion have been overcharging Americans for far too long. This will end soon."
The move to accept VantageScore 4.0 aligns with 2018 legislation championed by Senator Tim Scott and signed by President Donald Trump, which aimed to increase competition in credit scoring models. The FHFA's earlier decision to treat VantageScore 4.0 as equivalent to Classic FICO scores reversed previous GSE grids that had assumed VantageScore overstated borrower creditworthiness.