The Federal Housing Finance Agency (FHFA) is continuing in its stakeholder and public engagement related to the updated credit scoring models it is implementing for the Enterprises (Fannie Mae and Freddie Mac). The credit score updates will improve accuracy and provide a more inclusive approach to evaluating borrowers, the agency stated.
Since last fall, FHFA has been moving away from the Classic FICO credit score to using the FICO 10T and the VantageScore 4.0 credit score. These two scores consider data more traditional scoring systems do not, such as rental payment information, and are considered more accurate in determining a consumer’s credit worthiness. The agency also announced it would be transitioning from a tri-merge requirement, which requires credit reports from all three nationwide consumer reporting agencies, to a bi-merge requirement, which would necessitate only two.
The next phase of rolling out the new credit scoring model will include stakeholder forums and listening sessions to identify issues, opportunities, and challenges the implementation may face.
“This engagement process represents the next logical step in our efforts to ensure robust public input as we work towards implementing the new credit score requirements at the Enterprises,” FHFA Director Sandra Thompson said. “We want to hear from market participants and impacted stakeholders to ensure a smooth transition that minimizes costs and complexity.”
The transition is expected to occur over a long period of time. Initially, the agency expected the bi-merge credit implementation to occur by the first quarter of 2024, with the new credit score models to be implemented in two phases in 2024 and 2025. However, FHFA stated it is expecting the implementation date for the bi-merge requirement to occur later than previously planned.
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