Investors joke that owing a bank $100,000 means the bank owns you, but owing $1 million means you own the bank because it can’t afford to let you default. Large loans pose big risks, requiring lenders to minimize exposure. A misguided, Biden-era proposal to weaken mortgage credit reporting—by allowing fewer than three credit bureau reports—threatens borrowers and the housing market. The FHFA should reject this change and uphold the tri-merge standard for responsible mortgage underwriting.
Housing loans account for as much as a third of many Americans’ budgets, making them the single largest expense for almost every borrower. Banks and other lenders want to make certain that a borrower can repay a loan before extending credit; it’s that simple.
To help protect lenders and borrowers alike, three nationwide credit bureaus track the creditworthiness of potential borrowers. That’s been the gold standard supporting mortgage underwriting. Together, these three companies provide lenders with the most complete and consistent view of consumer credit risk, allowing for more accurate and reliable lending decisions.
Housing finance relies on credit systems that are largely invisible to consumers until they arrive at closing. Yet these systems are essential, helping lenders promote mortgage access and affordability. For first-time homebuyers, credit decisions can determine whether a family qualifies for a mortgage and how much it will pay each month.
In most cases today, lenders pull credit reports from all three companies, review them, and use that basis to assess creditworthiness. The tri-merge model isn’t perfect: bad loans still happen. But it helps catch many potential risks before the papers are signed.
That carefully balanced system may now be at risk.
A few years ago, the Biden Administration’s Federal Housing Finance Agency (FHFA) began considering changes to the traditional three-report system. Industry groups continue to push the agency to allow two, or even one, credit reports instead of the standard three. That would pose risks not only to lenders but also to borrowers and the broader housing market.
Congress has taken notice. In April 2024, Wisconsin Republican Rep. Scott Fitzgerald introduced legislation to codify the long-standing tri-merge requirement. Fitzgerald rightly pointed out that “President Biden’s financial regulators seem to rely more on ideology than facts and data” and “the FHFA’s proposal could be the obstacle that keeps borrowers from obtaining a mortgage if they have lower FICO scores but are otherwise credit-worthy.”
The Trump administration’s FHFA should abandon this misguided approach, which would further strain an already struggling housing market. This matters because borrowers with lower credit scores are often more difficult to assess accurately. Relying on a single score risks oversimplifying their financial profile, when a more complete view – drawing on multiple data sources – can better distinguish between true risk and borrowers who are otherwise creditworthy.
Research company Andrew Davidson & Co. recently found that “scores based on data from a single NCRA differed from the current tri-merge standard (median of 3 scores) often enough to impact loan pricing in meaningful ways.” In fact, it determined, “the potential for pricing variances due to reduced information is greater for lower-scoring (those with credit scores of 600–639) and minority borrowers, about a quarter of whom were found in this study to have had at least one credit score that differed from the tri-merge standard by at least 20 points.” Lenders need more information, especially about those with lower credit scores.
The market works best when it rewards responsible financial behavior. Models that limit lenders to two or even one credit report reduce visibility into a borrower’s full credit profile. That increases the risk that important information will be missed and that responsible Americans will be unfairly denied opportunities to build wealth through homeownership.
This debate comes at a critical moment. Housing prices are out of control, with three-quarters of households unable to afford a new home in 2025. The Trump administration is rightly prioritizing addressing affordability challenges for all Americans. As policymakers work to lower barriers to entry, it is essential to maintain the tri-merge standard, so lenders have the information needed to make sound decisions.
The essential purpose of the credit market is to determine who should get loans and who should not. Clearly, more information leads to better decisions. Lenders deserve the three-credit-report model, and the Trump administration should insist on maintaining it. Allowing fewer credit reports would introduce unnecessary risk into a system that depends on accuracy, consistency, and trust.
Leif Larson is a noted strategist with 20 years of experience in PR, public affairs and politics. He has contributed to the success of prominent political, corporate and advocacy groups across the country throughout his career.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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