11/03/2022
FACT SHEET: FHFA ANNOUNCEMENT ON CREDIT
SCORE MODELS
FHFA ANNOUNCES VALIDATION AND APPROVAL OF
FICO 10T AND VANTAGESCORE 4.0 CREDIT SCORE
MODEL S
NEWLY APPROVED M O DEL S WILL IMPROVE
ACCURACY, STRENGTHEN ACCESS TO CREDIT, AND
ENHANCE SAFETY AND SOUNDNESS
On October 24, 2022, the Federal Housing Finance Agency (FHFA) announced the
validation and approval of both the FICO 10T and the VantageScore 4.0 credit score
models for use by Fannie Mae and Freddie Mac (the Enterprises). After a multiyear
transition period, lenders will be required to deliver loans with both scores when
available.
Currently, the Enterprises use Classic FICO, a model that they have required for nearly 20
years. In 2014, FHFA and the Enterprises began an effort to modernize the Enterprises’
credit score model requirements, and in 2018, Congress required FHFA to create a process
for validating and approving credit score models. The validation and approval of FICO 10T
and VantageScore 4.0 is the result of a long effort by FHFA and the Enterprises to further
support accuracy, innovation, and inclusion in credit score models used by the Enterprises.
As a result of FHFA’s announcement, lenders, investors and other industry stakeholders, as
well as borrowers and first-time homebuyers, can expect:
• More Accurate Credit Scores: Part of the evaluation of new credit score models
included extensive testing by the Enterprises to ensure that any validated and approved
models met the necessary accuracy standards to treat borrowers fairly and to protect the
safety and soundness of the mortgage market and the Enterprises. Both FICO 10T and
VantageScore 4.0 met those standards.
• More Inclusive Credit Scores: While both Enterprises have already taken steps to
expand equitable access to credit, such as enhancements to their underwiting systems,
both FICO 10T and VantageScore 4.0 include new payment history information such as
rent, utilities, and telecom payments when available.
• Enhanced Safety and Soundness in the Housing Market: Promoting accuracy and
newer innovative credit score models in the housing finance system will ultimately lead
to better outcomes for borrowers, lenders, and the Enterprises. Additionally, because
both FICO 10T and VantageScore 4.0 are more accurate than Classic FICO, the
mortgage market will be provided with an improved view of risk from two different
credit score models.
On October 24, 2022, FHFA also announced that the Enterprises will require two,
rather than three, credit reports from the national consumer reporting agencies. This
change to the Enterprises’ credit report requirements is expected to reduce costs and
encourage innovation, without introducing additional risk to the Enterprises.
FHFA and the Enterprises expect that implementation of FICO 10T and VantageScore 4.0
will be a multiyear effort informed by industry engagement. FHFA and the Enterprises are
committed to working with stakeholders to ensure a smooth transition to VantageScore 4.0
and FICO 10T and to the new credit report requirements, with a key priority being to reduce
unnecessary cost and complexity.
TIMELINE
2014: FHFA and the
Enterprises begin
considering modernizing
the Enterprises’ credit
score model
requirements.
2017: FHFA issues a
request for input to
gather information about
the considerations of
updating the Enterprises’
credit score requirements.
2018: Congress passes
law requiring FHFA to
establish a process for
validating and approving
credit score models for
use by the Enterprises,
and FHFA issues a
proposed rule describing
that process.
2019: FHFA issues its
Validation and Approval
of Credit Score Models
final rule.
2020: The Enterprises
publish a Joint Credit
Score Solicitation,
allowing all credit score
model developers to
apply for consideration
of their models.
2022: FHFA hosts a
public listening session
on the potential transition
to a new credit score
model. Roughly 350
industry participants
attend, and 28 speakers
share their viewpoints.
