Fannie Mae and Freddie Mac leaders had concerns dating back to 2022 about the viability of VantageScore 4.0 as an approved credit scoring model, a trove of documents released through a public records request reveal.

But the Federal Housing Finance Agency (FHFA) — under former housing chief Sandra L. Thompson’s direction — dismissed those concerns and directed the government-sponsored enterprises (GSEs) to approve the VantageScore application.

Additionally, the documents indicate that Fannie and Freddie analyses found that tri-merge and bi-merge credit reports — referring to reports that pull data from all or just two of the three major credit bureaus — performed similarly in credit assessments, “whereas a single in-file report showed a decrease in accuracy.”

In October 2022, the FHFA formally announced plans to shift from the mainstay “Classic FICO” tri-merge credit score model to a bi-merge model in which lenders who sold loans to Fannie or Freddie would be required to pull FICO 10T (a newer scoring model from Fair Isaac Corp.) and VantageScore 4.0 reports from two different credit bureaus.

However, the FHFA, which oversees Fannie and Freddie through a conservatorship agreement, pumped the brakes on the bi-merge plan in January 2025, just days before Thompson resigned.

Thompson was replaced as FHFA director by Bill Pulte in March. He has since pushed forward with a plan to allow VantageScore 4.0 as an approved model for Fannie and Freddie loans, though he stressed in his July 8 announcement on social media that the tri-merge requirement would remain intact.

Housing Policy Council raises concerns

The revelations that Fannie and Freddie had reservations about VantageScore’s model stem from a Freedom of Information Act (FOIA) request made by the Housing Policy Council (HPC), which posted the FHFA’s response on its website on Jan. 30.

The HPC submitted the FOIA request on July 31, 2023. It received a formal response nearly three years later, on Jan. 15, 2026. The documentation provided by the FHFA is very heavily redacted, with nearly 200 of the 318 pages fully withheld pursuant to an exemption to the FOIA law that “permits agencies, as a matter of discretion, to withhold trade secrets and commercial or financial information obtained from a person which is privileged or confidential.”

HPC President Ed DeMarco took issue with the extensive redactions, noting in a letter to FHFA General Counsel Clinton Jones that his trade association plans to file an appeal. DeMarco believes the FHFA has a legal duty under the FOIA law to explain the rationale for its policy determinations.

“The documents that were provided in the January 15th release underscore how critical it is for the public to better understand FHFA’s decision to overrule the Enterprises’ recommendations and instead approve VantageScore 4.0,” DeMarco wrote. “FHFA also directed the Enterprises to move away from the required tri-merge file report and instead adopt a bi-merge credit report, but the cost-benefit rationale for this decision remains unclear.”

DeMarco, who served as acting director of the FHFA from 2009 to 2014, added that he believes transparency into the agency’s credit scoring decisions is necessary to maintain market confidence across the housing finance ecosystem.

“While the credit score modernization initiative was intended to provide more accurate, inclusive, and predictive credit scores and lower costs for lenders and borrowers through the introduction of competition, there is currently no public evidence that these benefits will materialize,” DeMarco wrote.

An audit report issued in September by the FHFA’s Office of Inspector General concluded that the FHFA “complied with applicable federal requirements and its own policies and procedures when making its decision to replace the tri-merge credit report requirement.”

In response to a request for comment on the HPC’s letter, an FHFA spokesperson told Scotsman Guide, “Members of Ed Demarco’s board say that they are not aligned with his comments nor the contents of his letter.”

Requests for comment sent to the HPC and DeMarco were not immediately returned.

VantageScore, FICO respond

Debate over how to lower credit scoring costs for lenders and consumers without negatively impacting mortgage underwriting risk has ramped up since 2018, when the Credit Score Competition Act was signed into law by President Donald Trump during his first term in the White House.

Following Pulte’s VantageScore announcement last July, FICO (as Fair Isaac Corp. is more commonly known) and VantageScore released competing studies, with each company claiming to have the superior model for determining credit default risk.

VantageScore, which is jointly owned by the three major credit bureaus — Equifax, Experian and TransUnion — has maintained that its model, which incorporates borrowers’ rental history when available, provides a more accurate snapshot of creditworthiness.

FICO has countered that VantageScore uses less rigorous scoring criteria and poses underwriting risk by providing scores to borrowers with limited credit history.

FICO released a statement Monday responding to the FOIA release.

“Although the analysis of the recommendations is almost entirely redacted,” the statement read, “what is clear from the unredacted documents is that FICO Score 10T was determined to be the sole credit score model recommended by both Fannie Mae and Freddie Mac … as a result of a lengthy, competitive and comprehensive evaluation.”

The FICO statement added that the company supports HPC’s call for the underlying analyses from the GSEs and the FHFA to be publicly released in full. 

Responding to a comment request for this story, a VantageScore spokesperson claimed that the FHFA’s analysis “reinforces what multiple independent studies have already found: VantageScore 4.0 is 13% more predictive of mortgage defaults than FICO Classic, and 15% more predictive during periods of macroeconomic stress.”

“Claims to the contrary mischaracterize the evidence,” the spokesperson stated. “Notably, FICO is a dues-paying member of the Housing Policy Council, a financial relationship that helps explain this misrepresentation of the facts.”

‘A blockbuster development’

Playing out at the same time as the FICO-VantageScore rivalry has been a fierce debate among mortgage trade groups about the benefits and potential drawbacks of tri-merge versus single-bureau credit reports. Bi-merge, meanwhile, has largely been left out of the discussion since the FHFA paused its implementation plans.

Scott Olson, executive director of the Community Home Lenders of America, has been among the industry participants staunchly in favor of maintaining a tri-merge mandate.

“Regarding the single-bureau findings, we see this as a blockbuster development,” Olson told Scotsman Guide on Tuesday, discussing the HPC’s release of the FHFA’s response. He said the release adds a degree of transparency into the debate that has gripped the industry for months.

“It could increase risk,” Olson said of a single-pull framework, “and it could increase game scoring, and also lender repurchase risk depending on how it’s handled, like we’ve said all along.”

The Mortgage Bankers Association (MBA) has been the most prominent advocate for dropping the tri-merge mandate. Bob Broeksmit, the association’s president and CEO, claimed in a recent blog post that the “tri-merge credit reporting requirement has become a license for price gouging and ripping off consumers.”

Instead, the MBA advocates for an optional single-file system that would allow lenders to underwrite Fannie- and Freddie-eligible loans using just one credit report from one of the national credit bureaus if the initial report shows a borrower’s credit score at 700 or above.

In response to Scotsman Guide’s request for comment on the impact of the HPC disclosure on its ardent push for a single-bureau framework, a spokesperson for the group said, “MBA for years has pushed for the GSEs to release their historical data and believe they should refresh it now (through 2025), release it, and quantify the differences.”

The MBA spokesperson added, “For all the reasons outlined in Bob Broeksmit’s blog posts, we believe it’s time to end the tri-merge requirement and move to a single-file framework.”

Mark McArdle, head of regulatory affairs and public policy at Newrez, a large mortgage lender and servicer, does not think the HPC’s FOIA disclosure moves the needle on the ongoing debate, since the FHFA did not provide any of the underlying data supporting its findings.

“What loans were included in the analysis? Did it vary by credit score or income? By purchase or refinance?” he asked. “I think the industry would like to make a data-driven decision, and therefore this doesn’t add much to the debate.”

Amid that debate, McArdle told Scotsman Guide he would like to see the industry become less reliant on the credit bureaus and move toward more diversified credit risk assessments that incorporate a borrower’s cash flow and bank account data. This may provide “a more holistic underwriting approach and reduce dependency on the credit bureaus,” McArdle believes.

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Ryan Kingsley contributed reporting.

This story has been updated to include comments from VantageScore and FICO.