FHFA Validates GSEs’ Use of Classic FICO Credit Score Model


The Federal Housing Finance Agency (FHFA) has given Fannie Mae and Freddie Mac the green light to use the Classic FICO credit score model for mortgage loan underwriting – but says it will take “an additional year to complete the validation and approval process” of the remaining third-party credit score models it has been considering.

In February, Fannie Mae and Freddie Mac solicited feedback from the lending industry as a “first step in the process of evaluating new credit score models.” These include new credit scoring models – which rely on bank statement data as well as alternative sources of credit information, such as utility bills – are geared for self-employed borrowers or borrowers with little to no credit history.

The development of and transition to new credit score models has been several years in the making.

“[The] FHFA will ensure that the enterprises validate and approve credit score models in a timely and prudent manner, so that Americans continue to have a safe and sound path to sustainable homeownership,” FHFA Director Mark Calabria said in February.

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