FHFA Urged to Address Competition Concerns in Credit Scoring Market
The Progressive Policy Institute (PPI) has issued recommendations urging the Federal Housing Finance Agency (FHFA) to address competition issues within the credit scoring market. PPI highlights concerns that the vertical integration of the three major credit reporting agencies (CRAs)—Experian, Equifax, and TransUnion—with VantageScore, which they own, creates a potential bottleneck. This structure allows CRAs/VantageScore to exclusively control the consumer credit data essential for rivals like FICO and future competitors to generate credit scores. PPI suggests that this arrangement could incentivize CRAs/VantageScore to steer business away from competitors, leading to higher prices, reduced choice, and slower innovation for lenders and consumers. The recommendations include requiring FHFA to report on competition metrics, solicit public comment on alternative data sources, and increase Congressional scrutiny of FHFA's process for introducing competing scoring models.