Getting the GSEs' transition to new credit scores right

The multiyear effort to change the credit scoring models required by Fannie Mae and Freddie Mac continues to move forward, and mortgage lenders, credit officers and compliance professionals need to know the latest developments. On the latest episode of the ABA Banking Journal Podcast, ABA VP Sharon Whitaker provides an update. Among other topics, Whitaker discusses:

• The operational challenges of moving from today's tri-merge system to merging just two credit reports.
• How FICO 10T and VantageScore 4.0 differ from credit scores in use today.
• Why rushing the transition might be counterproductive to the initiative's financial inclusion goals.
• The role of core platforms and other technology vendors in supporting the transition.
• What may happen in the Federal Housing Finance Agency makes the change but the Federal Housing Administration, Veterans Administration and others don't.
• Why the industry needs to see data on how the new credit scoring models would perform, and how banks can get involved in sharing feedback with FHFA.

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• Learn more about the credit score transition at the American Mortgage Conference, April 15-17 in Savannah, Georgia.
• Contact Sharon Whitaker to join ABA's working group on the issue.