America Needs Credit Score Competition to Make Homeownership Affordable Again

A 20-point difference in your credit score can cost you thousands of dollars over the life of a mortgage. For a hardworking family trying to buy a home, that’s not some rounding error.

Yet there’s a quiet push underway in Washington to make that costly scenario a reality for millions of prospective homebuyers. Some in the mortgage industry are lobbying the Trump administration to weaken the tri-merge credit reporting requirement, the system that pulls data from all three major credit bureaus to generate a comprehensive picture of a borrower’s creditworthiness. Instead, they want to rely on fewer reports to trim a few hundred dollars from upfront closing costs.

One of the largest advocates for this change, the Mortgage Bankers Association, have tried to mitigate criticisms by saying the tri-merge should only be dismantled for borrowers with credit scores above 700. But that claim doesn’t hold up. New data confirms what common sense suggests: even among borrowers above that threshold, moving to a single credit pull introduces additional risks.

As Washington works to make housing more affordable, policymakers should not dismantle systems that help maintain stability in housing finance. Access is already a serious challenge, and we should not make it worse.

Instead, solutions should be focused on expanding access without compromising stability. This means preserving the tri-merge standard, which ensures a complete and accurate credit picture, while allowing greater competition among validated credit scoring models within that framework.

New methods like Vantagescore 4.0[AJC1] achieve this by incorporating alternative data like rent and utility payments.

Inclusion of rent in credit scores would be a welcome change as millions of hopeful first-time homebuyers, who have heretofore been locked out of purchasing homes, have consistently paid rent and utilities on time. Without recognition of that history, they are “credit invisible,” meaning they face higher borrowing costs, loan denials, resulting in an ever-widening homeownership gap.

The fix isn't complicated. More data – and better data – lead to better lending decisions. When rent payments, utility bills, and other alternative financial data are included in credit evaluations, creditworthy borrowers get a fair shot. The tri-merge system is a cornerstone of that approach. It gives lenders a broader, more accurate view of a borrower's financial life, reducing errors and providing the kind of comprehensive picture that makes homeownership more accessible, not less.

The real opportunity, and the smarter path forward, is to drive genuine competition among credit scoring models on top of the tri-merge's comprehensive data foundation. That means allowing VantageScore and FICO to compete to build better, more inclusive scores while leveraging the distinct data maintained by each credit bureau. 

With FICO controlling an estimated 90 percent share of the U.S. credit-scoring market, it serves as the primary gatekeeper for mortgage lending. The solution isn't for FICO or other models to rely on less data. It's to encourage competing models to make smarter use of data, pushing one another toward greater accuracy and fairness that ultimately benefit consumers.

FHFA Director Bill Pulte understands this. I applaud his decision to embrace credit score competition by approving VantageScore for use on mortgages eligible to be sold to Fannie Mae and Freddie Mac, providing an alternative to the long-standing FICO monopoly. It's the kind of pro-consumer, pro-market reform that expands access without cutting corners on risk.

At a moment when housing affordability is dominating the national conversation – from the State of the Union to kitchen tables across the country – we should be expanding credit accuracy, not restricting it. Policymakers on both sides of the aisle say they want to make homeownership achievable for working Americans. A strong starting point would be protecting the tri-merge framework, welcoming credit score competition, and ensuring more Americans with alternative data get credited for it.

The Bull Moose Project is committed to making this case because we believe making homes affordable again starts with giving every American's financial story a fair shot.