Recently, three senators Ed Royce (R-Calif), Kyrsten Sinema (D-AZ), and Terri Sewell (D-AL) from the House have introduced a new piece of legislation that would basically allow the government sponsored enterprise to keep alternative credit score models in mind. In other words, this would put pressure to use alternatives other than the FICO credit score model the GSE’s use at the moment.
Sewell had said in a statement that she finds this fight critical partially because she strongly believes that these credit score models are not only outdated, but also fail to take certain factors into account (i.e., if borrowers were able to pay their rent on time). Essentially, the reps want to move away from the Fico’s monopoly credit score models.
In turn, this legislation would open the market for responsible, qualified potential homeowners who are actually qualified to buy a home. This could be a step in the right direction in terms of rectifying the issue in an effective way and allowing homeownership to become more of an attainable dream for different Americans across the country.
If this would pass, it would allow for more competition and open opportunities to other credit score companies that currently are unable to change the status quo. One company that is excited for the possible change is Vantagescore Solutions, which would definitely benefit from the increased market competition.
In a statement, the CEO of Vantagescore Solutions Barrett Burns said that “From the beginning our ask has always been to allow lenders to choose among today’s more predictive models that score more creditworthy consumers without lowering credit standards.”