Banking and Finance Law Daily Wrap Up, CONSUMER CREDIT—CHLA praises FHFA move to allow competing credit scores, (Jul 17, 2025)

By Steven Melendez

The industry group said the move would help combat monopoly pricing by the company behind FICO scores.

The Community Home Lenders of America (CHLA) praised a decision by the Federal Housing Finance Agency to allow lenders to use either the traditional FICO credit score or a competing model known as VantageScore 4.0 for loans sold to government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

“You have taken an excellent first step in reining in a monopoly marketplace, whereby the Fair Isaac management team—and no one else—sets the credit-pull price based on whatever number appeals to them,” the group said in a letter to FHFA director William J. Pulte. “No one else had a say until you made this change.”

The group expects Fair Isaac, the company behind the FICO score, to raise scoring prices in the coming fall, "which would be the 4th year in a row of major hikes," according to the letter. CHLA urged Pulte to publicly call on Fair Isaac to call for an end to the hikes and formally review the price increases, including exploring the possibility for additional reforms to prevent monopolistic—or, with VantageScore available, duopolistic—pricing that the group says raises the price of mortgages for consumers.

CHLA suggested that Fannie Mae and Freddie Mac establish their own credit scoring arms, which could help add competition to the market and ultimately be spun off as their own businesses.

After the announcement of the FHFA’s credit score changes, other industry groups, including the Mortgage Bankers Association, American Bankers Association, Housing Policy Council, and Structured Finance Association, stated that the move to allow the VantageScore model was a “promising first step” but that “questions and concerns” still remain about implementation (see Banking and Finance Law Daily, Jul. 14, 2025). Those groups called on the GSEs to swiftly offer implementation guidance on the new scoring model.

Updated FAQs. The FHFA also issued a set of frequently-asked questions (FAQs) and answers on the new credit scoring regime, which was spurred on by the Credit Score Competition Act, signed into law in 2018. The document indicates that lenders will be able to report either VantageScore 4.0 or Classic FICO scores for loans, with a third score known as FICO 10T expected to enter the mix in the future.

“Providing lender choice among multiple approved credit score models should help consumers, lenders, and other market participants realize the benefits of robust competition, such as lowering closing costs,” according to the FAQ. “The introduction of newer credit score models will improve risk management throughout the market as well, because these new models are more predictive of default risk.”

Freddie Mac and Fannie Mae have also created their own webpages about plans to implement the new scoring system, according to a report from the American Bankers Association Banking Journal. But the FHFA and GSEs haven't yet set a timeline for when lenders can begin to use the new scores, according to the report.

Companies: American Bankers Association; Community Home Lenders of America

RegulatoryActivity: BankingOperations CommunityDevelopment DirectorsOfficersEmployers FinancialStability GovernmentSponsoredEnterprises Loans Mortgages