A group of 23 Republican members of Congress sent a letter to Federal Housing Finance Agency (FHFA) Director Bill Pulte, commending him on allowing mortgage lenders to use updated credit scoring models in originating home loans.
The letter comes after Pulte announced on July 8 that Fannie Mae and Freddie Mac would allow lenders to use VantageScore 4.0, a tri-bureau credit scoring model from VantageScore Solutions, an independent company jointly owned by the three major credit bureaus — Equifax, Experian and TransUnion.
The representatives were led by Rep. Mike Flood, R-Neb., Chairman of the Subcommittee on Housing and Insurance, and Monica De La Cruz, R-Texas, Vice Chair of the Subcommittee on Housing and Insurance.
The letter stated that Pulte’s actions will help fulfill President Donald Trump’s mandate to lower the cost of housing by finalizing implementation of the Credit Score Competition Act, which was signed during his first term as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018. It allows for the inclusion of alternative data — like rent, utility and telecom bill payments — into credit scoring models used by government sponsored enterprises (GSEs).
In the seven years since its enactment, American consumers have been stuck using a single outdated credit model, the letter stated. “Thanks to your efforts, the credit score models on which our housing market relies will be better able to capture creditworthy individuals, like those in rural areas and our veterans, without lowering underwriting standards.”
When asked by Scotsman Guide about the recognition by the members of Congress, an FHFA spokesman replied: “Competition in credit scores is good, and paying your rent on time should help you qualify for a mortgage: this is the common sense that President Trump signed into law in 2018, and we are FINALLY delivering it for the American people.”
