Credit bureaus decline after FICO offers direct scores to consumers

Credit bureaus decline after FICO offers direct scores to consumers

Fair Isaac Corporation (FICO), known for its FICO® score used in U.S. consumer credit decisions, has disrupted the credit bureau industry with its Mortgage Direct License Program. This program, announced on October 2, 2025, allows lenders to obtain FICO scores directly rather than through credit bureaus, significantly reducing fees and bypassing intermediaries.

The program has led to a notable decline in the stock prices of major credit bureaus, including Equifax, Experian, and TransUnion. On the day of the announcement, Equifax shares dropped around 12%, losing approximately $3.8 billion in market value . Experian and TransUnion also experienced significant drops, with shares falling around 8% and 11% respectively .

The direct licensing program cuts the per-score fee to $4.95, eliminating the 100% markup previously charged by credit bureaus. This move has the potential to reduce credit bureaus' earnings by 10–15%, according to analyst estimates . Analysts from Raymond James and Citigroup noted that the program allows lenders to avoid the markup fees charged by credit bureaus, while Jefferies warned of potential earnings declines for the bureaus .

FICO's stock performance has also been impacted by the announcement. Despite the positive market reaction, FICO's stock closed at $1,512.71 on October 1, 2025, down 24.0% year-to-date from its 2025 high, with a 52-week range of $1,300–$2,402.51 . However, shares jumped around 10% in premarket trading following the announcement of the direct licensing program .

The strategic move by FICO is part of a broader shift toward SaaS (Software as a Service) and international expansion. The company's software segment revenue grew 3% year over year due to new subscription contracts, signaling a pivot away from perpetual licenses and increasing recurring revenue . FICO's international presence has also expanded, with the FICO Score used by more than 90% of U.S. top lenders and in over 40 countries .

Analysts remain broadly positive about FICO's prospects, with a consensus "Buy" rating and price targets ranging from $1,600 to $2,400 . However, the wide range of targets reflects uncertainty about the impact of the direct licensing program and macroeconomic conditions.

In conclusion, FICO's Mortgage Direct License Program has significantly disrupted the relationship between credit bureaus and lenders, leading to a decline in the stock prices of major credit bureaus. This move is part of FICO's broader strategic initiatives to shift toward SaaS and expand internationally, presenting both opportunities and challenges for the company.