Government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac announced this week that the planned transition from a “tri-merge” credit model — requiring credit reports to be pulled from all three, major agencies — to a “bi-merge” model that would require only two will be tied to other, new credit score requirements that currently do not have an implementation timeline.
“[T]he implementation of the bi-merge option has been aligned with the retirement of Classic FICO,” the GSEs said in their joint Enterprise Credit Score and Credit Reports initiative, updated on Thursday. In a section offering a proposed implementation timeline, these are listed as “TBD.”
The Federal Housing Finance Agency (FHFA) initially planned to finish gathering industry feedback on the change to a bi-merge system by the second quarter of 2023, and was set to implement a bi-merge system in the first quarter of 2024. That timeline also called for FHFA to begin delivering and disclosing FICO 10T and VantageScore 4.0 credit models’ historical data to support credit model updates in the first quarter of 2025.
By the fourth quarter of 2025, the FHFA was to have incorporated credit score model updates into capital and pricing. But in late 2023, FHFA announced a delay to the implementation of a bi-merge system citing industry concerns, and had said it would gather additional feedback on the change. Some lawmakers had also addressed concerns on the change directly to FHFA Director Sandra Thompson in a 2023 congressional hearing.
Republicans in Congress also sought to codify the tri-merge system into law last year, but it did not progress beyond a referral to the House Financial Services Committee.
In early 2024, FHFA announced that its planned transition to new credit requirements was expected to begin in Q4 2025, when the GSEs planned to begin acquiring single-family loans based on FICO 10T and VantageScore 4.0, retiring the longtime Classic FICO score. That is also when the tri-merge to bi-merge transition was set to take effect.
Now, however, the GSEs said that the implementation of bi-merge reports, which they characterize as “optional,” and mandatory new credit score calculations along with incorporating the “new credit score model requirements into mortgage processes,” are to be determined.
Shortly after the announcement was issued, the Community Home Lenders of America (CHLA) issued a statement expressing appreciation for the delay.
“CHLA appreciates this implementation delay regarding the GSE’s bi-merge policy,” said Rob Zimmer, the organization’s director of external affairs.
“While conceived with a lot of careful thought and work, this requirement was scheduled to take place at a time in which credit score costs have soared over 700% since late 2022. In addition, it would have imposed requirements that other major mortgage programs, like FHA and VA loans, were not imposing,” Zimmer added.
Zimmer authored a white paper from CHLA on the topic of credit scores in 2024, stating at that time that “FHFA should retain tri-merge and allow a lender and consumer the choice between FICO 10T and VantageScore 4.0, rather than requiring just one solution: a bi-merge plus VantageScore 4.0.”
A path forward is clouded by the combination of an unclear implementation timeline with the reality of a new, incoming presidential administration. Thompson is set to step down from her role as FHFA director on Jan. 19, one day before President-elect Donald Trump is set to take office. This week, Trump nominated private equity professional and philanthropist Bill Pulte to serve as her successor.
