Federal Housing Finance Agency (FHFA) Director Bill Pulte has intensified his criticism of the three major credit bureaus, labeling them ‘cartel-like’ and signaling a potential shift away from the standard tri-merge credit report requirement in mortgage underwriting. In a series of social media posts, Pulte announced that the FHFA is actively considering alternatives, including bi-merge (using two reports) and even a single-report approach.
Pulte’s Push for Change
In a Thursday night post, Pulte stated, ‘Equifax, Experian, and TransUnion have been overcharging Americans for far too long. This will end soon. We are seriously considering bi-merge, and stronger solutions.’ The following day, he added that the FHFA is ‘also studying the usage of just one credit report.’
Pulte’s remarks come as he instructs Fannie Mae and Freddie Mac (the GSEs) to approve all lenders to use VantageScore, an alternative to the traditional FICO scoring model. He emphasized that his approach to reforming credit reporting requirements would be ‘safer and sounder’ than previous efforts.
Industry Reactions
The Consumer Data Industry Association (CDIA), which represents the credit bureaus, defended the current system, stating that bureaus operate legally, offer discounts, and protect mortgage integrity through the use of three reports. The CDIA pointed to past statements when contacted, while the three major bureaus did not respond to inquiries by press time. The National Credit Reporting Association also declined immediate comment.
In contrast, the Community Home Lenders of America (CHLA) welcomed the move, with Rob Zimmer, its director of external affairs, saying, ‘This is a decisive action to increase competition and save mortgage borrowers money.’ CHLA has forecast that FICO could raise prices by 50% for 2027, a claim that FICO disputes, emphasizing its support for a competitive environment and the future implementation of its newer 10T model.
The Mortgage Bankers Association (MBA) also issued a statement supporting Pulte’s comments. MBA President and CEO Bob Broeksmit said, ‘We also support ending the tri-merge requirement and moving to a single-file approach for borrowers with strong credit profiles.’
Potential Impact and Concerns
The CDIA has warned that even with limits to credit scores above 700, historical data suggests a single report could result in lower scores for up to 27.8 million people. Meanwhile, the Federal Housing Administration (FHA), which oversees a significant portion of the government-related mortgage market, announced earlier this year that it would maintain the tri-merge requirement.
The GSEs have been under conservatorship since the 2008 financial crisis but have since enjoyed a long period of profitability. Pulte’s latest initiatives mark a significant step in his ongoing effort to reduce costs for borrowers and increase competition in the credit reporting and scoring industry.