Inclusive Credit Scoring Nears Reality After FICO, FHFA Strike Agreement

In a move that Federal Housing Finance Agency (FHFA) Director William Pulte described as "Huge!," a major obstacle that stalled efforts to introduce more inclusive credit scoring in the mortgage market is now being cleared.

According to a blog written by Julie May, Fair Isaac and Company (FICO) VP and general manager, scores, Fair Isaac has confirmed it reached an agreement to release long-awaited historical FICO Score 10T data to lenders within weeks, removing the final barrier to implementing updated scoring models at Fannie Mae and Freddie Mac (GSEs).

"We are excited to let the industry know that FICO, in collaboration with FHFA, and the GSEs, recently achieved a key milestone on the path to support the mortgage industry’s implementation of FICO Score 10T by reaching agreement on the terms and conditions for the release of historical FICO Score 10T score data associated with the GSEs’ Single Family Loan-Level datasets," said May in her blog. "This agreement represents a key step in making FICO Score 10T historical datasets broadly accessible to market participants."

The FHFA had planned to phase out the long-used FICO Classic score and require lenders to adopt both FICO Score 10T and VantageScore 4.0 in the fourth quarter of 2025. These modern scoring models incorporate trended credit behavior and additional data — such as rent, utility, and telecom payments — changes that supporters say will broaden access to mortgage credit. FHFA validated both models for use in late 2022.

While lenders received historical VantageScore 4.0 data in July 2024, disagreements between FHFA and Fair Isaac delayed access to comparable FICO Score 10T datasets.

FHFA Director Pulte signaled on Nov. 10 that a breakthrough was near, and May revealed in her blog "Where Things Stand for FICO Score 10T in the Conforming Mortgage Market" that the three credit bureaus will soon deliver FICO Score 10T datasets to the GSEs, which will perform their own validation before making updated historical files — extending through 2025 — available to the market.

Investors in mortgage-backed securities (MBS) and third-party risk modelers are also expected to use the data to test credit score performance, refine risk models, and ensure regulatory compliance. FHFA called the development a meaningful step toward increasing competition in the credit score market, though it has not said when Fannie and Freddie will formally accept VantageScore 4.0. Pulte ordered its adoption starting in July, but industry groups caution that the technical transition could extend into next year.

The debate comes amid broader scrutiny of tri-merge credit reports, which lenders must use when selling loans to the GSEs. The Mortgage Bankers Association (MBA) is pressing for single-file reports to reduce costs, while FHFA currently plans to maintain tri-merge requirements as the new scoring models roll out.