In a letter to FHFA Director Sandra Thompson, the credit reporting agency suggested three alternatives to the plan, which is on track to be implemented in the first quarter of 2024.

Rather than implementing the option of using two rather than three credit reports prior to mandatory score modernization, TransUnion suggests the former be added later in the game or scrapped. The FHFA is updating scores due to a legislative mandate.

Another alternative to giving lenders an option to use two rather than three credit reports would be to expand a Fannie Mae pilot that provides a different type of flexibility, according to the letter.

That pilot has tested prequalifications based on a single credit report. In it, three credit reports have only been pulled when borrowers were prequalified, TransUnion said.

Reducing the number of credit reports could cut costs by $10 per loan, but studies have come to different conclusions related to whether using only two would be significantly different than using three.

Credit scores based on two rather than three bureaus wouldn't be that much different on average, according to a Standard & Poor's report released last year.

However, using two rather than three reports with current scores could cost some borrowers adversely affected by it up to $6,600 in interest over the life of their loans, according to TransUnion's recent analysis.

The letter reiterated concerns raised in that study about the change leading to gaming of the system through cherry-picked reports, leaving nearly 2 million creditworthy customers out of the market and putting others in situations where their ability to repay loans is overestimated.

The missive written to the FHFA also raised some questions about whether the new regime could lead to compliance concerns that include disparate impact claims under the Fair Housing Act and Equal Credit Opportunity Act.

"A member of a protected class who is denied a mortgage because one credit score is ignored may be able to meet the first part of the three-part disparate impact framework," it reads, referring to a practice that "has caused or will cause a discriminatory effect."

TransUnion additionally questioned whether using the average of two reports as proposed would be in conflict with adverse action notice disclosures under the Fair Credit Reporting Act. Those disclosures indicate scores from a credit reporting agency were used in decisioning.

"The average … is not … produced by a CRA," TransUnion wrote.

If the dual credit report option moves forward, "it should be subject to an opportunity for public notice and comment under the terms of the Administrative Procedures Act," the credit bureau said in the letter.

The FHFA and its charges, government-related mortgage buyers Fannie Mae and Freddie Mac, have had multiple stakeholder forums related to their credit score and reporting initiatives, but they haven't always been open to the public.

TransUnion also called for the release of more data relevant to the dual credit report option.

"FHFA has given extensive consideration to changes in the credit score models … Analysis of the impact of the bi-merge … has not been transparent," TransUnion said.