The Federal Housing Finance Agency (FHFA) announced updates for the transition to a bi-merge credit requirement from the traditional tri-merge of reports from all credit reporting agencies.
The credit score requirement updates have been a source of contention since their announcement in 2022, with members of Congress concerned the change would result in the Enterprises (Fannie Mae and Freddie Mac) receiving incomplete borrower data, as well as increased risk. For years, FHFA has been moving toward this new model that requires lenders to provide credit reports from two of the three national credit reporting agencies (CRAs), as opposed to reports from all three.
The agency sought feedback in March 2023 on this proposal, as well as the decision to transition from the Classic FICO credit score model to the FICO 10T and VantageScore 4.0 models. These alternative credit scoring models are considered more accurate in determining a credit consumer’s worthiness and incorporate data previous scoring models did not, such as rental payment information.
According to the FHFA, the implementation of the bi-merge credit reporting requirement is expected to occur in the fourth quarter of 2025. To support this transition, the agency stated the Enterprises will accelerate the publication of the VantageScore 4.0 historical data. This information was expected to be published in the first quarter of 2025, but the FHFA moved up this deadline to early in the third quarter of 2024. Stakeholders identified access to this data as important in their efforts to analyze the new models and assess any changes they must make to their systems and models.
“Synchronizing bi-merge credit reporting with the implementation of the new credit score model requirements will reduce complexity for market participants, which is a key objective of our transition efforts,” FHFA Director Sandra Thompson said in a release. “The release of historical data on tens of millions of Enterprise loan acquisitions affirms the commitment of FHFA and the Enterprises to a robust, transparent implementation process.”
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