FICO Shares Plunge 20% as US Government Moves to End Its Mortgage Scoring Monopoly

Shares of Fair Isaac Corporation (FICO), the company behind the FICO credit score, plunged about 20 per cent on Tuesday to around $670 after the head of the Federal Housing Finance Agency announced a major shake-up of US mortgage pricing.

FHFA Director Bill Pulte said late on Monday that government-sponsored enterprises Fannie Mae and Freddie Mac would move from two separate pricing matrices to a single, unified pricing grid. Crucially, according to Barron’s, the new grid will incorporate VantageScore — a direct competitor to the FICO score created jointly by the three major credit bureaus, Experian, Equifax and TransUnion. For decades, the FICO Classic score has been the only credit score accepted on the mortgage pricing grid.

Pulte wrote on X that instead of two separate grids, “Fannie and Freddie are hereby moving to ONE PRICING GRID with VantageScore joining the existing FICO Classic pricing grid” — meaning lenders will no longer necessarily have to pay for a FICO score.

The sell-off deepened after Rocket Mortgage, a unit of Rocket Companies, announced late on Monday that it would become the first mortgage lender to use VantageScore 4.0 as its preferred credit scoring model for all eligible loans, according to Investopedia. The company said that after roughly four months of testing, VantageScore helped more clients qualify while reducing credit scoring costs.

TransUnion also piled on the pressure, extending its standalone VantageScore 4.0 mortgage pricing at $0.99 per score through December 2028 to give lenders multi-year cost certainty, reports Seeking Alpha.

The plunge left FICO on pace for its worst daily decline in more than six years and its worst-ever month — the stock is down about 42 per cent in September and has lost roughly half its value this year.

Sources:

• Barron’s: Fair Isaac Stock Is Today’s Worst in the S&P 500. Is the FICO Score’s Near Monopoly Over?
• Investopedia: The US Moves to End FICO’s Mortgage Scoring Monopoly. The Stock Is Tumbling
• Investor’s Business Daily: Fair Isaac Tanks After Government Snaps FICO Score Monopoly For Mortgage Pricing