On Monday, U.S. Sen. Tim Scott (R-SC) led a coalition of Banking Committee Republican who called on the Federal Housing Finance Agency (FHFA) to implement reforms in credit scoring models.
Scott, the ranking member of the Senate Committee on Banking, Housing and Urban Affairs, said changing the models will expand homeownership opportunities and make scores more predictive. Additionally, the coalition called on FHFA Director Sandra Thompson to abandon plans to change current requirements that lenders provide credit reports from all three national consumer report agencies (tri-merge) to only two (bi-merge).
“The bipartisan Credit Score Competition Act was signed into law over five years ago…Section 310 established requirements for use of third-party credit scoring models by the Enterprises, updating their decades-old model and allowing for the inclusion of alternative data sources like rent, utility, and telecom bill payments. Including this alternative data into scoring models will expand homeownership opportunities for creditworthy borrowers and make scores more predictive,” the coalition wrote. “FHFA’s decision to implement the bi-merge would inherently result in incomplete data being reported to the Enterprises. This decision is seemingly at odds with the implicit goal of Section 310, which is to allow for consideration of more data to increase predictiveness of credit models.
Scott was joined by U.S. Sens. Mike Crapo (R-ID), Mike Rounds (R-SD), Thom Tillis (R-NC), John Kennedy (R-LA), Bill Hagerty (R-TN), Kevin Cramer (R-ND), and Steve Daines (R-MT). The coalition also urged the FHFA to ensure better coordination and data sharing during the transition to new credit scoring models.