Three senators are reigniting the fight to allow Fannie Mae and Freddie Mac to consider alternative credit-scoring models beyond the FICO credit score the government-sponsored enterprises currently use.
This week Reps. Ed Royce, R-Calif., Kyrsten Sinema, D-Az., and Terri Sewell, D-Al., introduced H.R. 898, the Credit Score Competition Act, which enables the GSEs to consider alternative credit scoring models when making mortgage purchasing decisions.
Royce and Sewell first introduced in December 2015, but since Sewell is now seated on the House Ways and Means Committee, Sinema became the lead Democrat on the bill.
“Alternative credit score consideration by the GSEs is a win-win: it opens up the market in a responsible manner for those qualified to buy a home and eliminates the government-backed monopoly in credit scoring. That’s why the Credit Score Competition Act has garnered such strong bipartisan support,” said Royce.
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If passed, the act would open the door for other credit score companies like VantageScore Solutions. “Markets work most efficiently when there’s competition and the status quo is effectively a government sanction monopoly,” said Barrett Burns, president and CEO of VantageScore Solutions.
“We are supportive of all of the efforts to bring much needed competition among credit score model developers into the mortgage origination space,” Burns said. “From the beginning, our ask has always been to allow lenders to choose among today’s more predictive models that score more creditworthy consumers without lowering credit standards.”
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