Consumer Finance

FHFA Pushes Back New Credit Score Model For 2019

VantageScore Credit Scoring

The Federal Housing Finance Agency (FHFA) won’t be launching its new credit score model until at least 2019.

According to American Banker, the annual progress report on the Fannie Mae and Freddie Mac conservatorships stated that FHFA will not set an implementation date for a new credit score model until after the launch of a new Single Security Initiative, which is scheduled for June 3, 2019.

While Fannie and Freddie currently use a credit scoring model introduced in 2003 known as FICO 5, the FHFA has been working to update the credit scoring models for the last several years. The FHFA is deciding between the new FICO 9 or VantageScore 3.0 models, or a combination of the two.

“While FHFA believes that it would be desirable to update the Enterprises’ credit score requirement from the current Classic FICO standard, FHFA has not determined which credit score option should be adopted as a replacement,” according to FHFA’s 2017 Scorecard Progress report.

In the meantime, the GSE regulator will be evaluating industry comments on using the latest FICO or VantageScore credit scoring models, with comments due March 30.

“FHFA will evaluate all responses to the RFI, along with supporting analysis and outreach, and plans to make a decision on updating the Enterprises’ credit score requirements in 2018,” the report said. “Any implementation date related to updated credit score models will, however, be delayed until after the implementation of the Single Security Initiative.”

Earlier this month, it was reported that the regulatory relief bill included a provision focused on credit scoring, with some critics stating that the credit scoring legislation is redundant.

The provision is sponsored by Mike Crapo, Idaho Republican, who chairs the Banking Committee. The measure mandates that the FHFA must review credit scoring alternatives to FICO, the model deployed in mortgage decisioning.

And some analysts see VantageScore coming out ahead, should the legislation pass as planned. Capital Alpha Partners’ Charles Gabriel said via research note that the credit score provision is “a surprise victory for the three major credit reporting agencies” – which have ownership of VantageScore.


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