- 1 day ago
Three industry leaders from each of the bureaus come together and the message is unmistakable: the future of mortgage lending depends on an inclusive, data-rich approach to credit qualification. HousingWire’s Clayton Collings moderates a conversation with Joel Rickman of Equifax, Michele Bodda of Experian, and Satyan Merchan from TransUnion to pull back the curtain on one of the industry’s hottest topics: credit. This executive panel delves into how the talk around moving from tri-merge to bi-merge and the associated data reduction is shortsided, risky and misaligned with consumer needs. Lenders choosing to start with all three reports aren’t just checking a box, they’re eliminating surprises that cost borrowers time, money and trust.
As credit files expand with new sources, alternative data, and more contributors than ever, the panel outlines how industry-wide collaboration is strengthening credit access and transforming the mortgage process. This conversation gets straight to the point: more dvata leads to better decisions, more qualified borrowers and a stronger housing finance system.
As credit files expand with new sources, alternative data, and more contributors than ever, the panel outlines how industry-wide collaboration is strengthening credit access and transforming the mortgage process. This conversation gets straight to the point: more dvata leads to better decisions, more qualified borrowers and a stronger housing finance system.
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NewsTranscript
00:00Hi, I'm Clinton Collins, the CEO at HousingWire, and we are here for a pretty legendary conversation.
00:12This may be the first time, at least my first time, bringing together leaders from the three
00:17nationwide consumer reporting agencies to talk about what's changing in data in the mortgage
00:22process. Joel, Michelle, Satyan, thank you so much for joining us today. So, Joel, I want to kick off
00:28with you with kind of your view on why data is so important in today's mortgage ecosystem and how
00:36you're thinking about the landscape that is just the talk of the town. Well, first, I want to say
00:41very much, thank you so much, Satyan and Michelle, for joining us. I think it's important for everybody
00:47to know we are vicious competitors. I mean, outside of this time right here, we're going to fight to
00:52earn our business with each and every customer. And we all come to the table with our unique offerings
00:58and our unique differentiators. So that's the first thing I want people to realize. But more
01:03important, all of us are here today because we actually stand united that more data is better
01:09for the consumer. And that starts with all three credit reports. And then that expands out on all
01:15the differentiated things that all three of our organizations are doing to bring to the industry
01:20with the single objective of how do we help more people qualify for the loan? That's what it's really
01:24about where there's so much conversation about how do we reduce data. That's how you eliminate
01:29people. We're looking at an inclusive approach of how do we get more people qualified today? So
01:34I think we all share that. And the fact that we're all sitting here together is representative
01:38of that united goal. Michelle, do you feel the same way? Vicious competitors?
01:41Well, yeah, I can agree more. All day, every day. And I totally agree. Also, our mission is financial
01:51inclusion for all. And so we spend all day, every day, not just competing with these guys, but also
01:56working really hard to make sure that we can fairly represent all consumers and give everybody the
02:01chance to homeownership if that's what they want. All right. So on the topic of vicious competition,
02:05it's been disclosed by each of you that there are major differences between your credit files and the
02:10data you report. I think one important fact when it comes to the three national bureaus is
02:16we don't see each other's file, which makes that an even harder competitive landscape, right? I
02:23cannot inspect Michelle's file or Joel's file. So I really have to work with my teams to do what we
02:30think is the best thing to add to our bureau data. And it's something that, you know, for those that
02:36aren't aware, we have, you know, I can speak to myself, you know, me and my team are the face of
02:41the mortgage business and also the auto business. But we have large amounts of people whose job in
02:46is every day, day in and day out to get source more information, more data on the file. And one thing I
02:52want to add here is the file is just becoming more and more diverse. Like we can talk about this a little
02:59bit more, but there are so many new, different, unique financial lending products that I think
03:05the world right now is as differentiated as a file as we've ever seen.
03:08What's an example of like these, the new data capabilities or features of the file?
03:14Sure. So for one example would be the buy now, pay later lending product. So the affirms of the world,
03:20we work through CDI and industry organizations to, to talk about how, how to get something standard on
03:26that on the file. But at the same time, it's really up to the furnishers to decide when, how much and
03:34to whom they furnish. And so again, we compete very ferociously about getting those difference,
03:39getting as much data as we can on our reports. The goal is to give as much representation to
03:44consumers as we can. And so whether that's through rental payment history, whether it's through how
03:49consumers manage their cash flow, whether it's through alternative financial services, whether they be
03:55short-term loans or things like buy now, pay later, like Satyan was just talking about, it's, I agree.
04:02Like the files are more diverse now probably than they've ever been.
04:06I think about it from overall contributors. If you think about five, 10 years ago,
04:10the number of people contributing data to a credit file that day has gone up three X.
04:15And it's all of the things that my peers here are talking about. It's different type of contributors.
04:21And so you have not only the difference in financial contributors, but then you also have the
04:26additional data around, are they paying rent, like Michelle said, or do they have utility information
04:31that we can add? Because the new scores will take that into account and help improve that look of the
04:36customer. And it all comes down to the data. Without the data, you don't have a score. And without a score,
04:42you don't go anywhere in the process, you know, jump in and say, you know, I can speak for TransUnion.
04:47I think this exists with all the bureaus is, is it's, it's Michelle's comment earlier. It's about getting access
04:52to credit, access to homes. You know, TransUnion works a lot on, on that consumer education,
04:59free credit scores, download our app, right. To be able to, to really understand what a consumer can do
05:06to change and what changes they can make to, to make themselves mortgage eligible. Right. And so
05:12there's a lot of education there that consumers do need to continue to build on.
05:18And again, with this proliferation of different products that you think about a younger generation,
05:22maybe their first experience with credit is, you know, in a firm loan, right. To understand what
05:28does that mean? What does that mean to go apply for a credit card? There's a, there's a lot of education
05:33that consumers need. But at the end of the day, the credit score and mortgage is, is I just think
05:37of that as like the doorknob to get in. It's just the front door. It's actually the data that we've
05:42been talking about that is used for the underwriting. The GSEs don't actually use a score in their
05:47underwriting. All they use is the data and the trended data that was pioneered about a decade ago,
05:52right. Which is much more data that's used in the traditional score today. So it's all about that data
05:57that's in the score. And again, the data is different across the bureaus. It's not just the underlying
06:01data. It's the innovation in the technology, in the security, in the consumer support and how we
06:07answer questions for consumers, how we educate consumers, the tools that we give them, the places
06:12that we go to be able to communicate with them in a way that's meaningful. It feels like more data
06:17is always something that, that people want. But one of the trends and the talking points I've here
06:22is the potential move from tri-merge to a buy merge, or even situations where a single report could be the
06:28solution for lenders. That's kind of a move away, the move to less data. I have a feeling that's
06:34something lenders are pretty curious about. I think it's a very slippery slope. And so I'll
06:39actually start in non-mortgage. There's a lot of big lenders in today's world that pull three credit
06:44files or two credit files in the auto space, or even the credit card space, because they believe that
06:50there's differences. And they want to see those differences because they believe it gives them a
06:54competitive edge in making better decisions and pricing their products more aggressively. So
06:59that is someone that has total choice. They could go with no credit score, no credit file,
07:04and they're choosing to buy three. And we're seeing that more and more in the industry.
07:09When it comes to mortgage, it really comes to the lost applications. The whole drive is an economic
07:15drive. If we're talking about what is the best way to get consumers into homes and to qualify more
07:21consumers, it is more data. And I haven't heard anybody really give a solid argument as to why
07:26that's not true. All of the arguments I've heard have been very much financially based, which I
07:30respect. And I think that all of us are working together with the different options to say, how do
07:35we help up front on the shopping behavior to control costs a little bit more? But we maintain that very
07:44proven safety and soundness on the back end so that the consumer gets the best price possible.
07:50And that the American taxpayer is backing good quality loans.
07:54And it's all ties back to for a score that scores more people that that takes account for all of
08:00this data that we just talked about. And so we I think all of us understand that that kind of
08:05financial conversation. One of the things and again, this came up as well yesterday from Stan from
08:11from Freedom Mortgage thought he made a great point of the US housing system is truly the envy of the
08:17world. Right. It's it's a it's kind of a remarkable way to match capital with people looking to buy a
08:23home and getting to a home in a very efficient and a very safe way. Right. In a safe way to get people
08:29now. What is the average mortgage is well over four hundred thousand dollars. You're getting up to
08:33million dollar mortgages, you know, to pay maybe ten, fifteen dollars more for credit data to keep that
08:39system going. Seems like like it's worth it.
08:42Yeah, I would like to comment, though, building on this in today's world, the lender has the ability,
08:47the choice to have one credit bureau to bring that in and to start the underwriting process.
08:52They're not required to have all three till later in the process.
08:55But what we see from many lenders is they've had that bad experience for a borrower that they got closer to
09:02close, got the other credit scores and they had to go back to that borrower and change the rate.
09:07And that's a bad experience for the borrower. It's a bad experience for the lender.
09:11And that sometimes results in a lost loan. So we see people voluntarily saying as soon as I know somebody
09:16qualifies and they show me any sign I'm going to move forward, they want to make sure they have all three
09:20credit bureaus. And that is because the loss of a loan is so much detrimental to compared to the cost
09:28of getting data to do the loan right. And it also reiterates that they know there's enough variation
09:33between our different credit bureaus that it's going it has a high potential of changing when it
09:39goes to that final pricing sheet. And so there's a choice today. There's options today. And we see
09:45people choosing with their pocketbook to buy more data sooner to make sure that the experience for their
09:50customer is that that lender closes that mouth. I would say one thing, maybe adding on to what
09:56Joel said is that the consumer experience is really important on the consumer having that certainty and
10:02again, getting credit for all of what they've done in their credit file or in their relationship to
10:08credit. There's been conversations about other lending lines. Again, Joel said very rightfully so that
10:13in other lending lines, multiple reports are used. Also, those are those lending lines that consume this
10:19alternative data way more than mortgage does. So it's good to see mortgage moving in that direction. But my point
10:24here is that typically a borrower and even their broker or their loan officer may not know exactly right up front
10:31which loan product is best for them. It could be a GSE loan, it could be a non-QM loan, it could be a VA loan,
10:38right? And I think again, to be able to cast the net as widely as possible to get the consumer in the right
10:44product. Taking a look at all three bureaus and really using a trended score like Vantage scores
10:50probably is the best answer to get the best option from the consumer.
10:53The other piece I would put on that around the three bureaus and that is if we go to one,
11:01eventually, like in any area, the models are going to change a little bit. So if you know that the
11:07broker is picking the highest score or you believe that and you're seeing a 730, you probably eventually
11:14will see some of the pricing price that more like a 710 or a 705 because they have to take into account
11:21what they're not seeing. So the absence of data punishes the consumer from a pricing perspective
11:27and I think that's one of the risks that we really haven't contemplated. But I will tell you if you
11:33listen to enough of the panels, and there's been a lot of them in the last six months on this topic,
11:37a lot of our leading lenders are out there sharing that information. They truly want to get the best loan
11:42for the customer and so there's a decent chance they're still going to buy all three bureaus. It's just
11:47they're going to put the best one forward so then the overall ecosystem will have to adapt somewhat
11:52to that approach. Michelle, can you kick us off with one of the biggest misperceptions that you're
11:57you're hearing here at NBA Annual or you hear from clients interactions that you'd like to
12:02set the record straight on or bring clarity to? I mean, I think Joel started off this session with
12:07the biggest one which is that the bureaus don't compete or that there's not innovation happening
12:12within data or the credit bureau industry. Because like we said, mortgage is the only space
12:20that requires three bureaus to be pulled. We've been competing on that underlying data for decades,
12:27innovating, building on top of it, trying to represent the consumer as completely as we can. And so for me,
12:33that's the biggest misperception I keep hearing over and over again at this conference.
12:38I think you hit you guys hit the main ones on the point. I did hear an individual stated that
12:44three credit bureaus is not good for the consumer and I don't believe that in any way. I think that
12:50is a misconception and I think that's the spirit of the conversation that more data is better.
12:54What do you think that that person's perception was?
12:58I think it was purely financial. Financial pricing. Maybe we can save 30 or 40 dollars on that closed loan,
13:03which all of us know is such a small drop. I mean, it's less than, you know, a percent percent
13:09and a half of the total closing cost to secure a loan in the most sound housing market in the world.
13:15Seems a little ludicrous at times that we're spending this much energy talking about it.
13:20But I'm glad we are. I think, you know, you started this conversation talking a little bit about
13:24education and how are we doing that? It's what's become really obvious in the last couple of months
13:29is the vast need for education, not only for the consumer, but even our customers.
13:35So on the customers, and this is going to be the actual last question, but as we approach a period
13:41with lender choice and vantage score, what do lenders need to do to get prepared and what moves
13:46they need to be making today to prepare for 2026? That seems to be like the head scratcher I do here
13:52pretty often. Michelle, please take us off and close out.
13:56I think separately all three of us have come to the table and said, please,
14:01we will give you vantage for right now so that you can evaluate it in actual underwriting decisions
14:07and know how it will play out in your portfolio and in the real decisions you're making over time.
14:12The GSEs are going to come out with their guidelines for it here
14:16soon and then you'll know how you could make decisions using it. Take, take, take the score.
14:21As Michelle said, we've all made it available. I know that Fannie is starting to add it on the
14:28back end in the MBS pretty soon here. So I just think eyes on the score start to develop that Rosetta
14:33Stone with an alternative to the score that's been in market for 30 years.
14:38And I would just wrap up. I think they've hit it on the nose. So I want to wrap up by saying thank you,
14:43Clayton, for helping make this happen.
14:45I'm just proud we had a civilized conversation with three fierce competitors. Joel, Michelle,
14:50Satyaan, thank you so much. Thank you.
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