As you know, in October 2022, FHFA announced the validation and approval of two new credit score models, FICO 10T and VantageScore 4.0, for use by Fannie Mae and Freddie Mac (the Enterprises). After a multiyear transition period, lenders would be required to deliver both FICO 10T and VantageScore 4.0 credit scores with each single-family loan sold to the Enterprises. Currently this is now scheduled to go into effect in Q4 of 2025.
At the same time, FHFA announced that the Enterprises would require lenders to deliver loans with a bi-merge rather than the current tri-merge credit report, in which credit reports from two, rather than three, nationwide consumer reporting agencies are used. This is no longer going to be a requirement, but rather it will be optional and is currently scheduled to go into effect in Q4 of 2025 also. (The Enterprises have published a Partner Playbook which details both initiatives, along with the proposed implementation timetable and FAQs.)
On July 11, 2024, FHFA announced that the Enterprises release historical credit scores associated with the VantageScore 4.0 model on tens of millions of loans acquired beginning in April 2013, the earliest point at which trended consumer credit data is reliably available across the three nationwide consumer reporting agencies. This release will provide lenders the ability to better analyze and understand the VantageScore 4.0 model. The Enterprises plan to release FICO 10T historical data but have not provided a release date yet.
What ‘s Happening Now to Prepare for These Changes
Here are several things to consider as you get ready to comply with these changes:
- VantageScore 4.0 historical credit score data is now available to support the transition and enable approved lenders to review that detailed information as part of their decisioning process.
- We are still waiting for confirmation from LOS and POS providers as to when they will be able to accept/ingest multiple scores.
- Bi-merge credit reports will be optional. (We anticipate more guidance will be provided, but for now the one announced requirement will be “once a tri-merge, always a tri-merge” i.e. if you pull a tri-merge on a consumer, you will be required to submit a tri-merge.)
- Some lenders are gaining access to FICO 10T scores through early pilot programs. We are monitoring this situation closely and will provide updates as they become available.
- The tentative date for lenders to utilize the two new scoring models is Q4 of 2025. However, many in the industry feel the implementation may be delayed even more due to the fact that the Enterprises have yet to release the FICO 10T historical data, and it is estimated it could take an additional year for lenders to analyze this data once available.
For further information about these upcoming changes, be sure to follow Xactus on LinkedIn.
You can also stay updated here: https://www.fhfa.gov/policy/credit-scores .
