FHA Will Keep Requiring Tri-Merge Credit Reports But Are Updating How Scores Are Calculated
HUD has announced FHA will keep tri-merge credit reports for single-family mortgages. However, it plans to update and expand the credit scoring models allowed for FHA-insured loans.
This decision follows a recent joint announcement by HUD and the Federal Housing Finance Agency (FHFA) that both FICO 10T and VantageScore 4.0 will be permitted. In addition, HUD will still accept the long-used Classic FICO model for FHA transactions.
Tri-merge credit reports—combining data from all three major credit bureaus—have become a focal point in industry debates over the cost of credit reporting, market competition, and appropriate underwriting standards.
HUD said it will provide implementation timelines and further instructions on the new scoring models later this year.
The Consumer Data Industry Association (CDIA) CEO Dan Smith welcomed the decision to uphold the tri-merge structure:
FHA Will Keep Requiring Tri-Merge Credit Reports
FHA’s stance aligns with a broader federal initiative to increase competition in mortgage credit scoring. Last month, FHFA announced that a limited number of loans underwritten with VantageScore 4.0 will now be eligible for sale to Fannie Mae and Freddie Mac, creating new room for alternative scoring models in the conventional mortgage market.
Lenders are already beginning to adjust. Last week, Rocket Mortgage said it had begun using VantageScore 4.0 alongside Classic FICO in parts of its qualification process, signaling growing acceptance of newer scoring options.
FHA’s decision is also a win for groups such as the Community Home Lenders of America (CHLA), which has argued that replacing tri-merge reports with a single-bureau pull could heighten risk and open the door to manipulation in government-backed lending.
The CHLA publicly backed FHA’s choice to maintain the tri-merge requirement as it introduces new scoring models.
“CHLA commends FHA for its intention to maintain the tri-merge requirement for 3 credit score pulls for approval of an FHA loan,” said Scott Olson, executive director for CHLA.
“As CHLA explained in detail in January, proposals for a single credit pull would have harmed both FHA and their borrowers — so FHA is doing the right thing here,” Olson added.
Earlier this year, CHLA released a policy paper warning that single-bureau proposals for federally backed loans could raise loan risk, incentivize efforts to “game the system,” and potentially put FHA borrowers at a disadvantage if the government-sponsored enterprises moved to single-bureau standards while FHA retained more stringent requirements.
