Federal Housing Finance Agency director Bill Pulte took time before Labor Day Weekend to lambast the nation’s primary credit bureaus.
Pulte accused Equifax, Experian and TransUnion of “overcharging Americans,” HousingWire reported, promising to bring an end to it. He said his agency was considering adopting a bi-merge credit report, which would mean pulling data from two of the trio, rather than all three.
A day later, Pulte added that he was “studying the usage of just one credit report,” a proposal that has drawn support from the Mortgage Bankers Association.
“These important updates will give lenders greater flexibility, enable more consumers to be scored accurately, and expand sustainable access to homeownership,” MBA president Bob Broeksmit said.
Spokespeople for the three credit bureaus did not respond to requests for comment from the publication.
Opponents of the tri-merge credit report cite the costs associated with pulling data from all three sources, saying the disruption of that traditional process will save borrowers money. Proponents, however, say the system protects borrowers and prevents them from gaming the system, which could potentially come with the risk of higher delinquencies.
Pulte also fired a shot at FICO, the classic scoring system for credit reports. He declared success for an initial rollout of VantageScore 4.0 acceptance for Fannie Mae and Freddie Mac, opening up the score’s usage to all lenders effective immediately.
“Since 2020, FICO has increased the price per a person’s credit score by 1,800%,” Pulte said. “FICO has enjoyed a monopoly. No more.”
New scoring models, such as VantageScore 4.0 and FICO 10T, incorporate rent payment history and trended credit data over 24 months, potentially qualifying 5 to 10 million previously excluded borrowers.
As of May, VantageScore costs 99 cents per pull versus FICO’s $9.99 and produces higher average scores, creating strong economic incentives for lenders to adopt it, though “score shopping” could increase GSE portfolio risk and trigger higher FHFA loan repricing.
Source: therealdeal.com
