Federal Housing Finance Agency Director Bill Pulte has issued a directive instructing Fannie Mae and Freddie Mac to permit all lenders to utilize the VantageScore credit scoring system, a move that challenges the long-standing dominance of Fair Isaac Corp. (FICO). In a post on X, Pulte stated that the instruction is effective immediately.
Pulte highlighted that Fannie Mae and Freddie Mac had already successfully implemented VantageScore, resulting in 50 lenders delivering loans using the new system. He characterized the directive as an end to the monopoly held by FICO in the credit scoring sector.
The directive comes amid criticism of FICO's pricing practices. Pulte accused the company of raising the per-person cost of obtaining a credit score by 1,800% since 2020. This accusation was echoed by Senator Josh Hawley (R-MO), who launched an investigation into FICO's pricing of credit scores in the mortgage market in March, arguing that rising costs were placing an undue burden on homebuyers.
During pre-market trading on Friday, FICO stock declined by 2.14%. Pulte also directed criticism toward the credit reporting agencies Equifax Inc., Experian, and TransUnion, accusing them of operating like cartels and overcharging consumers. He stated that the government is considering "bi-merge and stronger solutions (SAFER and SOUNDER)" to address these practices.
