FHA adopts lowest-score rule for multiple credit models.

The FHA has issued guidance requiring lenders to adopt a clear, standardized approach for calculating borrower and transaction credit scores when multiple scoring models are submitted. The directive mandates that, where more than one approved model is reported, the lowest relevant score be used for underwriting and eligibility determinations. The move intends to eliminate inconsistency across lenders and automated underwriting systems by specifying how VantageScore 4.0, FICO 10T and legacy FICO scores must be treated in tandem. The guidance focuses on procedural clarity rather than changing minimum credit thresholds, but it shifts practical responsibility onto lenders to align their credit-scoring workflows, vendor interfaces and policy manuals with the new calculation rule.

The operational impact on lenders will be immediate and multifaceted: loan origination systems, credit report aggregators and underwriting rules must be updated to implement the lowest-score methodology, and training will be required for underwriting, compliance and production teams. Lenders will need to audit vendor deliverables, revise borrower disclosures and rework quality-control sampling to reflect the new score selection logic. For borrowers, the approach may reduce approved eligibility when multiple models produce divergent results, particularly for credit-challenged applicants. Market participants should reassess pricing, compensating factor policies and exception practices to manage potential upticks in manual underwriting and system exception flags.

– Scope of guidance: Specifies how multiple approved credit scoring models must be handled, including VantageScore 4.0, FICO 10T and classic FICO models.
– Lowest-score rule: Requires using the lowest applicable borrower or transaction score among reported models for underwriting and eligibility.
– Operational changes: Necessitates updates to LOS, vendor integrations, underwriting rules and staff training to ensure accurate score selection and compliance.
– Compliance and QC: Requires revisions to quality-control processes, audits and lender policies to verify consistent application of the new calculation method.
– Borrower impact: May affect approval rates and pricing for applicants when different models yield divergent scores, increasing reliance on manual reviews and compensating factors.

You can read this full article at: https://wrenews.com/fha-mortgagee-letter-2026-11-lowest-credit-score-models/

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