The rule would establish standards and criteria for the validation and approval of third-party credit-score models used by Fannie Mae and Freddie Mac
VantageScore Solutions, the company behind the VantageScore credit-scoring models, has criticized a proposed rule by the Federal Housing Finance Agency, saying it would perpetuate and strengthen monopolistic behavior and control by FICO on mortgage credit scoring.
The proposed rule would establish standards and criteria for the validation and approval of third-party credit score models used by Fannie Mae and Freddie Mac.
VantageScore said the FHFA misinterpreted the statutes requiring credit score competition in the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018.
The company said the rule would rule all of FICO’s competitors as “ineligible,” adding that the language is not reflective of the intention and desire that Congress had when it passed the credit score competition provisions of the law.
“Should the proposed rule stand, the federal government would be picking winners and losers to the detriment of millions of consumers,” the company said. “For over 12 years, VantageScore has competed on a fair playing field in all loan categories except for the mortgage market. This competition has led to more predictive, more consumer-friendly, and more inclusive credit-scoring models. Those circumstances refute claims that VantageScore Solutions and/or its owners would gain some type of anticompetitive advantage if VantageScore were to be accepted in the mortgage space.”
In its proposal, the FHFA said that it received feedback indicating concerns with the competitive position of VantageScore when compared to other credit-score model developers by virtue of its joint ownership by three nationwide consumer reporting agencies.
VantageScore ended its statement by saying it looks forward to providing commentary and working with the incoming director of the FHFA.
“We presume that the next director will share Congress’s desire for a competitive and fair credit scoring market,” the company said.
