The Federal Housing Administration (FHA) announced last week that it will continue requiring tri-merge credit reports to maintain “prudent risk management” as it transitions to new credit scoring models.
This move follows a signal in late April from U.S. Department of Housing and Urban Development (HUD) Secretary Scott Turner. Aligning with a similar shift by the Federal Housing Finance Agency (FHFA), Turner indicated that FHA loans will replace the long-standing FICO Classic model with VantageScore 4.0 and FICO 10T.
“FHA will continue to require the use of a tri-merge credit report, ensuring a comprehensive and consistent evaluation of borrower credit information across all acceptable scoring models and supporting prudent risk management,” the agency stated in last week’s guidance.
The FHA cited several reasons for adopting the new credit score models, including a desire to “catalyze long-delayed competition, reduce systemic dependency on a single legacy model, encourage pricing discipline in the credit reporting market, and better reflect contemporary consumer credit behavior.”
Lenders should expect implementation dates and further guidance later this year.
This clarification arrives amid ongoing industry debate. Some leaders, including the Mortgage Bankers Association (MBA), have advocated for single-file credit reports in specific and limited cases, arguing it would reduce costs without introducing systemic risk.
The proposal has revived arguments over borrower costs versus market stability, dividing trade associations.
The Community Home Lenders of America (CHLA) praised the FHA’s decision, asserting in a statement that a single credit pull “would have harmed both FHA and their borrowers.”
In a January statement, the CHLA warned that diverging from the government-sponsored enterprises (GSEs) — if they adopted a single pull while the FHA did not—could increase mortgage risks and create incentives to game the system.
Dan Smith, president and CEO of the Consumer Data Industry Association (CDIA), agreed that the FHA “made the right call.” He emphasized that the tri-merge report is essential for promoting data accuracy, market competition and investor confidence.
“More data, not less, is the foundation of a sound mortgage market,” Smith noted in a statement. “Requiring tri-merge reports across all acceptable scoring models ensures consistency, reduces risk, and preserves the integrity of the credit evaluation process for lenders, investors, and borrowers alike.”
