Momentum is building for credit reporting reform, with advocacy groups like the Mortgage Bankers Association (MBA) calling for a shift away from the longstanding tri-merge credit report model toward a bi-merge or even single-report system. But stakeholders across the credit ecosystem are sounding alarms over the potential consequences of such a move.
“We are injecting significantly more risk into the mortgage lending system,” warned Eric Ellman, president of the National Consumer Reporting Association (NCRA), citing the $13 trillion currently owed on 85 million mortgages as a point of systemic vulnerability.
A Risk To Visibility And Inclusion
Ellman strongly opposes the proposed single-report model, calling it “an untested experiment” that could exclude millions of creditworthy borrowers from mortgage eligibility.
“The more credit information a lender has about a consumer, the better the lending decision that can be made,” he explained, noting that not all creditors report to all three bureaus and that reporting cycles often differ between them.
For example, one bureau’s report might show a high balance on a borrower’s account, while another shows the balance as already paid off—simply due to timing differences in when banks report to each credit agency.
If lenders were permitted to pull only a single report, Ellman suggested they may need to disclose that choice to consumers. Alternatively, lender could revert to a bi-merge or tri-merge if the resulting score is too low.
He also warned that the move could disproportionately harm younger borrowers and consumers of color, who often rely on alternative credit data to demonstrate their financial reliability.
“Moving to just a single credit report is going to give a lender a very limited view of a consumer’s overall credit history,” Ellman said. “And that’s going to fall more harshly on consumers at the lower end of the credit score spectrum… consumers on the margins, who are often the young consumers and consumers of color, would be shut out of mortgages and closed off from the American dream of homeownership.”
While supporters of the shift argue it could reduce origination costs and improve affordability, Ellman pushed back, calling the actual savings minimal in the broader context of closing costs.
“I know that there are people who think that this shift will save consumers costs at closing. But let’s keep in mind that maybe we’re talking about a savings of $25 at closing when consumers are paying $15,000 to $30,000 at closing,” he said. “It’s a drop in the ocean.”
Monopoly Power and Systemic Dysfunction
Paul Oster, CEO of Better Qualified and a certified FICO expert, echoed concerns about borrower exclusion, while also slamming what he called a dysfunctional and monopolistic credit reporting system.
“You’re not going to get a true borrower profile if you just go with two or one of the bureaus,” Oster said.
He criticized both the credit bureaus and FICO for what he described as poor data management and lack of accountability.
“The bureaus do a terrible job maintaining, updating, verifying, and validating information,” Oster said, claiming that 80% to 90% of credit reports contain errors, often due to inaccurate or negligent third-party reporting.
He pointed to a recent settlement involving TransUnion as an example: “TransUnion just settled a class action lawsuit about not removing unauthorized inquiries on consumers’ credit reports. They paid about $23 million dollars. I mean, unfortunately, the average person in that case gets like 16 bucks.”
FICO Launches BNPL-Inclusive Scores
Meanwhile, FICO is promoting its own credit scoring innovation. The analytics firm recently unveiled FICO Score 10 BNPL and FICO Score 10 T BNPL, the first major credit scores to incorporate Buy Now, Pay Later (BNPL) data. These new models will be offered this fall as part of the existing FICO Score 10 Suite, with no additional charge.
According to FICO, the expanded models are designed to promote financial inclusion by factoring BNPL repayment behavior alongside traditional credit data. A year-long study by FICO found that BNPL users often open multiple loans in a short period—prompting the company to create a methodology that aggregates these loans into a single variable for improved scoring accuracy.
“Buy Now, Pay Later loans are playing an increasingly important role in consumers’ financial lives,” said Julie May, vice president and general manager of B2B Scores at FICO. “By expanding our FICO Score 10 Suite with new models designed to incorporate BNPL data, we’re enabling lenders to more accurately evaluate credit readiness, especially for consumers whose first credit experience is through BNPL products. This innovation also supports our mission to expand financial inclusion by helping more consumers gain access to credit.”
In a separate announcement, FICO’s Board of Directors approved a stock repurchase program to buy back up to $1 billion of the company’s outstanding common stock. The open-ended program will allow for share repurchases on the open market and in negotiated transactions.
Trigger Leads And Revenue Streams
Both Ellman and Oster touched on the controversial issue of trigger leads — another revenue-generator for the credit bureaus, where consumers’ credit data is sold after they apply for a loan. The U.S. Senate has passed the Homebuyers Privacy Protection Act (S. 1467) on June 12, which aims to limit the use of mortgage trigger leads.
Oster called the practice “a joke” and a clear violation of consumer privacy. “I’ve never given my express, written, or verbal authorization for you to give my information to somebody else,” he said.
Ellman acknowledged widespread consumer frustration with trigger leads and agreed the legislative proposals to limit them face significant operational hurdles. Still, he believes consumer protections need to be improved, though ideally not through rushed or poorly structured laws.
