Fannie, Freddie to Consider Alternatives to FICO Scores--Update

By Andrew Ackerman 

WASHINGTON -- One firm's dominance over the credit scores used to vet many U.S. mortgages is getting a shake-up.

Fannie Mae and Freddie Mac, two mortgage-finance firms that back nearly half of U.S. mortgages, will have to consider credit-score alternatives to Fair Isaac Corp.'s FICO score when determining a mortgage applicant's creditworthiness, under a new rule completed on Tuesday by the mortgage-finance giants' federal overseer.

The move by the Federal Housing Finance Agency is seen as a win for VantageScore, a credit-score system by VantageScore Solutions LLC, which is owned by the three large credit-reporting firms: Equifax Inc., TransUnion and Experian PLC.

"One of my priorities is to ensure that the American people have a safe and sound path to sustainable homeownership, which requires tools to accurately measure risk," FHFA Director Mark Calabria said in a written statement. "The final rule we are publishing today is an important step toward achieving that goal."

The measure is required by regulatory rollback legislation signed into law last year.

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AnnaMaria Andriotis contributed to this article.

(END) Dow Jones Newswires

August 13, 2019 14:43 ET (18:43 GMT)

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