With the Federal Housing Finance Agency working to replace the classic FICO credit score model with the FICO 10T and VantageScore 4.0 credit score models for use by Fannie Mae and Freddie Mac, the agency is seeking public feedback on its implementation plans.
FHFA is planning to implement the new credit score models over two phases in 2024 and 2025. Phase 1, which is slated to begin in the third quarter of 2024, will include delivery and disclosure of the additional credit scores. Phase 2, estimated to occur in the fourth quarter of 2025, will include incorporation of the new credit score models into pricing, capital and other processes. Once in place, lenders will be required to deliver both FICO 10T and VantageScore 4.0 credit scores with each loan sold to the GSEs.
Implementation of the new FICO and VantageScore models will improve accuracy by capturing new payment histories for borrowers when available, such as rent, utilities and telecom payments, FHFA noted. ABA supports the expansion of credit score models to safely and reliably expand credit access, but has raised concerns that any new requirements do not impose additional costs for lenders or borrowers and do not subject lenders to new liability for the use of any approved credit score model.