FHFA and FHA Announce Plans to Modernize Credit Scoring Models

Today, the Federal Housing Finance Agency (FHFA) and the Federal Housing Administration (FHA) announced plans to bring newer credit scoring models into the underwriting process. NAR has been advocating for updates and greater competition in credit scoring models for decades, and this move is an important step toward making this a reality.

Introducing competition into the credit scoring process has the potential to lower costs, improve efficiency, and open the door to qualified borrowers who may have been overlooked under older models. By allowing the use of multiple credit scoring approaches, including those that incorporate rent, utility, and other payment histories, this policy can help create a more complete and fair assessment of creditworthiness.

FHFA has been working on the acceptance of these new models over the last five years, and the inclusion of separate models for FHA is a welcome addition. The GSEs will now start accepting VantageScore immediately for 21 firms that are cleared to use it. FHA will release an implementation timeline in the near future.

NAR looks forward to working with the leadership of both FHFA and FHA, as well as Fannie Mae and Freddie Mac, to fully integrate these new models.