In Defense of Risk-Based Credit Scoring

When Bill Pulte took the reins at the Federal Housing Finance Agency (FHFA), critics didn’t expect him to shake up the conversation around credit reporting. But that’s exactly what he’s done. And he’s right.

In an era where “streamlining” often becomes shorthand for deregulation and cost-cutting at the expense of equity and stability, Pulte has chosen to preserve what works: the tri-merge credit reporting system. His stance isn’t just regulatory common sense—it’s a full-throated defense of economic fairness, mortgage market stability, and consumer protection. It’s also a smart move at a time when credit fraud is rising rapidly. By requiring lenders to verify creditworthiness across all three major bureaus—Equifax, Experian, and TransUnion—the tri-merge model offers a built-in safeguard that flags discrepancies and helps detect potential fraud before it can do lasting damage.

The tri-merge model requires mortgage lenders to use credit reports from all three national credit bureaus—Equifax, Experian, and TransUnion—when underwriting loans backed by Fannie Mae or Freddie Mac. Since every bureau collects data differently, this approach ensures that lenders get a complete, consistent, and accurate picture of a borrower’s financial situation, correcting discrepancies and reducing the risk of unfair denials or inflated interest rates due to missing data.

Yet, under pressure from special interests and certain policymakers, there’s been a push to replace this model with a so-called “bi-merge” or even a single-pull credit reporting system. The claim is that it would cut costs and simplify the process. But let’s be clear: this move is not about consumer benefit—it’s about taking shortcuts that will introduce new risk, reduce fairness, and widen the very disparities the credit system was built to close.

The fact is, the modern tri-merge credit system is already one of the most inclusive financial tools in the world. Reducing credit inputs will not help underserved communities. It will hurt them. Millions of Americans—especially women, minorities, and low-income families have gained access to credit they were previously denied due to discrimination or opaque lending practices. Thin-file borrowers—such as gig workers, young adults, and immigrants—have also benefitted as the tri-merge model protects them by aggregating more data from more sources, increasing their chances of qualifying for fair and affordable credit.

A 2023 study by TransUnion and S&P Global even found that removing one bureau could shift a borrower’s credit score by up to 45 points. That’s not a rounding error—that’s the difference between a mortgage approval and a rejection. More than 2 million borrowers—mostly in the 620–659 score range—could fall below the 620 minimum required for GSE-backed loans if one credit report is dropped. That's millions of working-class Americans priced out of homeownership through no fault of their own.

Tri-merge also plays an overlooked role in fraud prevention. In 2024, U.S. consumers reported $12.5 billion in credit fraud losses—a 25% increase from the year before. Tri-merge helps catch fraud through cross-verification. When one bureau's file doesn't match the others, it’s a red flag that often stops fraud in its tracks. Eliminate that redundancy by reverting to a bi-merge or single pull system, and you risk handing bad actors the keys to the financial system.

Bill Pulte’s defense of the tri-merge model is not about preserving the status quo—it’s about preserving progress. The current credit reporting system has helped enable one of the most robust housing markets in the world. It powers automated underwriting, keeps origination costs low, and helps lenders price risk appropriately.

It also levels the playing field. With a standardized tri-bureau approach, every borrower is assessed by the same criteria. This creates consistency for lenders, accountability for borrowers, and transparency for regulators. It’s not perfect—but it’s a hell of a lot fairer than the alternative.

That’s why groups across the ideological spectrum—from the American Bankers Association to the National Association of State Credit Union Supervisors—have expressed concerns about eliminating the tri-merge model. It’s also why lawmakers like Rep. Scott Fitzgerald have pushed legislation to codify it. They understand that credit decisions don’t happen in a vacuum. They echo what Pulte has rightly identified: that tri-merge is a cornerstone of economic opportunity, not a technical detail to be tinkered with.

America’s credit system is the foundation of its consumer economy. It fuels housing, business, education, and entrepreneurship. And while it isn’t flawless, the tri-merge model is one of its most effective tools. It enhances fairness, reduces risk, and ensures that credit decisions are based on a full and accurate picture—not an incomplete snapshot.

Bill Pulte is right to push back against efforts to gut this system. He’s not defending bureaucracy—he’s defending balance. He’s protecting the ability of millions of Americans to pursue the dream of homeownership on fair terms. And he’s doing it with clarity, courage, and common sense.

Policymakers should follow his lead. The mortgage market isn’t the place for shortcuts, experiments, or half-baked reforms. The stakes are too high—and the costs of getting it wrong are too steep.

Keep the tri-merge. Protect the system. Preserve the American dream.