FHFA changes timeline for new credit score models

The Federal Housing Finance Agency announced updates to the implementation of new credit score requirements for single-family loans acquired by Fannie Mae and Freddie Mac.

Details: The FHFA said:

• It is aligning the implementation date of the bi-merge credit reporting requirement with the transition from the Classic FICO credit score model, which it expects to occur in the fourth quarter of 2025.

• The enterprises will accelerate the publication of VantageScore 4.0 historical data, originally expected to be published in the first quarter of 2025, to early in the third quarter of this year.

• The FHFA and the enterprises continue to work towards providing similar data to support the transition to the FICO 10T model.

ICBA View: ICBA is concerned that the FHFA is unnecessarily accelerating this process by initiating the publication of VantageScore 4.0 data without doing the same for FICO 10T, potentially bifurcating any analysis. ICBA continues to work with other groups and the FHFA on the implementation of the new credit score requirements, and it urges the agency to take as much time as needed to ensure the process is successful for all stakeholders.

Background: The FHFA in 2022 approved the new models to replace Classic FICO, which the enterprises have used for the past 20 years. The FHFA has said the new models are designed to be more accurate by capturing new payment histories for borrowers, such as rent, utilities, and telecom payments.

Industry Input: In a recent joint letter, ICBA and other groups called on the FHFA to release the results of its testing process that validated the new credit score models. In a previous letter, the groups expressed concerns with the FHFA plan, said the agency’s plan fails to address the far-reaching effects of the change, and called for expanded stakeholder engagement and transparency.