Use of “bi-merge” credit reporting to occur simultaneously with implementation of new credit score model requirements
The Federal Housing Finance Agency (FHFA) today announced updates to the implementation of new credit score requirements for single-family loans acquired by Fannie Mae and Freddie Mac (the Enterprises).
Following extensive stakeholder engagement and input, FHFA is aligning the implementation date of the bi-merge credit reporting requirement with the transition from the Classic FICO credit score model. This aligned transition is expected to occur in the fourth quarter of 2025.
To better support market participants with this transition, 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 2024. FHFA and the Enterprises continue to work towards providing similar data to support the transition to the FICO 10T model, contingent upon achieving the necessary conditions for acquisition and publication of this data. FHFA will provide further details on implementation timing for FICO 10T once this process is complete.
In recent public forums hosted by FHFA, stakeholders have emphasized the importance of this historical data to allow them to analyze the new models, as well as bi-merge credit reporting, and assess any changes they must make to their systems and models. Stakeholders have also shared perspectives on the efficiencies associated with aligning the option for bi-merge credit reporting with the transition from Classic FICO.
“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,” said FHFA Director Sandra L. Thompson. “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.”
In October 2022, FHFA announced the validation and approval of the FICO 10T and VantageScore 4.0 credit score models for use by the Enterprises, as well as the transition to a bi-merge credit reporting requirement. The new models are expected to increase accuracy in credit scoring while providing multiple views of credit risk for market participants. Under a bi-merge approach, credit reports from two, rather than three, of the nationwide consumer reporting agencies may be used, which is expected to promote more robust market competition. In March 2023, FHFA and the Enterprises initiated a public engagement process to solicit input on this initiative and gather information on how to ensure a smooth transition to the new credit score requirements. This engagement process was further expanded in September 2023, with additional opportunities for stakeholder input expected throughout 2024 and beyond.
FHFA and the Enterprises will continue to provide regular updates to assist market participants throughout this transition.
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