US housing regulator criticizes FICO for high borrower costs

Key facts

• Federal Housing Finance Agency Director Bill Pulte criticized FICO for high borrower costs.
• Pulte suggested FICO is not interested in competitive pricing.
• The FHFA is considering changes to credit report usage to lower borrowing expenses.
• Pulte is studying the use of a single credit report.
• Fannie Mae and Freddie Mac now accept VantageScore 4.0, which includes rent and utility payments.

U.S. federal housing regulator Bill Pulte stated on Wednesday that credit scoring company FICO is unnecessarily increasing costs for borrowers. Pulte, Director of the Federal Housing Finance Agency (FHFA), indicated on social media that his agency is exploring changes to the use of credit reports to reduce borrowing expenses.

Pulte expressed that FICO appears uninterested in offering competitive costs and instead utilizes various methods to raise prices for consumers. FICO scores are numerical assessments of creditworthiness used by lenders, with lower scores typically resulting in higher borrowing costs.

Earlier this year, Pulte announced that Fannie Mae and Freddie Mac would begin accepting additional credit scores using the VantageScore 4.0 model, which incorporates rent and utility payments to improve access to affordable mortgages. Pulte also mentioned that the FHFA expected to meet with credit bureaus Experian, Equifax, and TransUnion and is studying the possibility of using only a single credit report to lower costs.