The Federal Housing Finance Agency announced it is issuing new rules surrounding the adoption of alternative credit scoring rules, just as it said it would earlier this year.
Chief among those rules is a provision which would prohibit the government-sponsored enterprises from using the VantageScore credit scoring model because of conflicts of interest with the company’s backers.
Vantage Score Solutions the developer of the VantageScore credit scoring model, is a joint venture between the nation’s three largest credit bureaus, Equifax, Experian, and Transunion.
And in recent years, VantageScore, boasting the backing of the Big 3, has pushed for the GSEs to explore alternatives to the classic FICO model.
The move came after several years of the government-sponsored enterprises looking at alternative models, but despite requesting input from interested parties on a possible change to its credit scoring models and even extending the deadline <click.icptrack.com/icp/relay.php?r=57944262&msgid=589367&act=WP4R&c=841722&destination=https%3A%2F%2Fwww.housingwire.com%2Farticles%2F42448-fhfa-extends-deadline-for-industry-to-provide-input-on-al…> for feedback, the regulator shut down its exploration of pushing past the classic FICO model.
Now, the FHFA has issued its rules for choosing alternative models, but the rules do not allow the GSEs to use VantageScore, because of its relationship with the credit bureaus.
The FHFA stated those stipulations in a section titled “credit score model developer independence.”
As for the FHFA’s rules themselves, they address the process for the GSEs to choose an alternative credit scoring model (other than using VantageScore).
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