FICO Plans Direct Mortgage Score Licensing, Pressures Credit Bureaus

Fair Isaac Corp. (FICO) announced a new direct licensing program allowing mortgage lenders and resellers to obtain FICO credit scores without going through the major credit bureaus Experian, Equifax, and TransUnion. This move aims to increase competition and transparency by cutting out the credit bureaus' intermediary role, potentially reducing the costs for mortgage lenders by eliminating up to 100% markups. FICO CEO Will Lansing stated that this shift brings price transparency, competition, and cost efficiency to mortgage lending, offering pricing model choice directly to users of FICO scores. The announcement caused FICO's shares to surge over 20%, while the major credit bureaus' stocks dropped significantly due to concerns over margin pressure and reduced relevance in mortgage credit scoring. Analysts and federal housing regulators viewed the change as a positive development that may ease regulatory pressure and lower credit score costs for consumers. However, credit bureaus still control consumer data and infrastructure, suggesting they remain integral to the broader credit ecosystem despite this disruption.