TransUnion Puts A Price On A Mortgage Rule Change: $0.15 A Share
CEO Chris Cartwright says a shift to two credit files would cost about $33 million in revenue and play out over at least a couple of years.
TransUnion, the credit-data company, would lose roughly $0.15 of adjusted diluted earnings per share a year if all federally regulated mortgages moved to a two-credit-file standard, CEO Chris Cartwright said on the company's Tuesday earnings call. He called the financial exposure limited and said any change would likely take at least a couple of years to play out.
The $33 million estimate
The scenario is a move to "buy-merge," in which lenders buy two bureaus' files and merge them, instead of today's three-file "tri-merge." Cartwright said that if every loan regulated by the Federal Housing Finance Agency made the switch, and the bureaus kept equal share, the annual hit would be about $33 million in revenue excluding FICO royalties.
He said only about $100 million of annual revenue is directly tied to the FHFA requirement. The $33 million is less than 1% of total revenue, and the $0.15 is less than 3% of adjusted diluted earnings per share, he said.
Much of TransUnion's mortgage revenue, he added, is no-margin FICO royalties, prequalification usage and other revenue not subject to a tri-merge rule.
Why lenders may keep pulling three
Cartwright said lenders would have commercial reasons to keep using three files anyway. For 35% of consumers, at least one individual bureau score differs from the tri-merge score by 10 points or more. He also said the FHA, the VA and the USDA still support the tri-merge standard.
He said TransUnion charges about $11 for its data in the tri-merge, under 10% of the tri-merge cost, which itself is under 1% of mortgage closing costs. By TransUnion's analysis, a buy-merge model could leave an estimated 600,000 new mortgage borrowers a year paying more in interest, almost $7,000 more over the life of the loan.
An analyst at Morgan Stanley asked how TransUnion's file stands apart. Cartwright pointed to its trended credit data, its coverage of fintech lenders and its neutrality toward the resellers, who would pick which two bureaus to use.
A strong quarter behind the argument
TransUnion gathers consumer data and sells credit, fraud-prevention, identity and marketing products. In the third quarter it said organic constant-currency revenue grew 8%, or about 5.5% excluding FICO mortgage royalties, and adjusted diluted earnings per share rose 14% to $1.25.
It raised the low end of its 2026 outlook, now expecting $4.81 to $4.88 in adjusted earnings per share, up 12% to 13%. It lifted the quarterly dividend to 13.5 cents from 12.5 cents and raised its buyback authorization by $1 billion, to $2 billion.
Cartwright also marked the final earnings call of CFO Todd Cello, who remains CFO through year-end and will advise full time through March 1. A search for a successor is under way.
Cartwright said TransUnion remains well positioned for a range of outcomes on the FHFA question.
Sources
- TransUnion Non-GAAP EPS of $1.25 beats by $0.04, revenue of $1.31B in-line;gives Q4 and FY — seekingalpha.com
- TransUnion (TRU) Q3 Earnings and Revenues Surpass Estimates — Yahoo Finance
- TransUnion: Q3 Earnings Snapshot — Associated Press
- TransUnion raises quarterly dividend by 8% to $0.135/share, expands buyback program to $2B — seekingalpha.com
- TransUnion Announces Strong Third Quarter 2026 Results — globenewswire.com
