FHFA Announces Updated FICO and Vantage Scores for Use by GSEs | So Good News


Recently, the Federal Housing Finance Agency (FHFA) announced the approval of two new credit scoring models, FICO 10T and VantageScore 4.0 for use by Fannie Mae and Freddie Mac (GSEs or Enterprises). Lenders will have several years to use the new models before they can expect to report all of the loans sold to the GSEs.

Currently, and for the past 20 years, Companies have relied on Classic FICO scores. However, in 2014, the FHFA, in cooperation with Businesses and other industry partners, began developing new credit criteria that would reconsider many factors to better reflect the creditworthiness of borrowers with poor credit files. This has led to better ways to get loans that take into account the borrower’s credit history, such as rent and utilities.

The FHFA says, in its papers, that the two new credit scoring models will be more accurate and comprehensive than Classic FICO because the new payment history and other factors have gone through extensive testing to ensure accuracy and expand the data they rely on to measure creditworthiness. . In addition, these new models are designed to improve safety and stability in the real estate market by improving accuracy and creating better risk assessment methods.

In a statement at the annual meeting of the Mortgage Bankers Association, FHFA Director Sandra Thompson said:

“New models bring the value of innovation to the table in two ways:

FICO 10T and VantageScore 4.0 both provide more accurate credit scores than Classic FICO. We hope that the market, including investors, will be given a better understanding of the risk from not one but two different types of credit.

FICO 10T and VantageScore 4.0 are more comprehensive than Classic FICO. Although Businesses have already taken steps to increase access to credit, such as enhancements to their scoring system, FICO 10T and VantageScore 4.0, new payment history for borrowers is available, such as rent, utilities and telecom payments. “

Director Thompson said that seeking this “will allow more borrowers to be evaluated by Businesses than just one interest rate, which will help them manage credit risk and increase access to credit for borrowers with low credit history.”

The FHFA also announced that the GSEs will require two, not three, credit reports from consumer reporting agencies. This additional change in credit reporting requirements is expected to reduce the amount of money these companies have to encourage innovation.

Director Thompson explained that a multi-year management plan will be established, and the agency will coordinate with industry and stakeholders to ensure positive and sustainable change. We will continue to monitor these developments as the implementation plan is implemented.


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