Fair Isaac's New Pricing Models Boost FICO Scores, Credit Bureaus Take a Hit

Fair Isaac Corporation's shares rose 20.5% as the company unveiled new pricing models allowing mortgage lenders to bypass credit bureaus and receive a FICO score directly for a fee. The move increases revenue for Fair Isaac and cuts costs for lenders, but also reflects a competitive response to credit bureaus developing alternative credit scoring models.

On September 12, 2025, Fair Isaac Corporation (FICO) announced a significant strategic shift in its mortgage scoring model, which has sent shockwaves through the financial sector. FICO's shares rose by 20.5% following the unveiling of new pricing models that allow mortgage lenders to bypass traditional credit bureaus and receive FICO scores directly for a fee. This move not only increases revenue for FICO but also cuts costs for lenders, reflecting a competitive response to credit bureaus developing alternative credit scoring models.

The new FICO Mortgage Direct License Program, effective October 1, 2025, introduces two pricing models: the Performance-Based Model and the Per-Score Only Pricing Model. The Performance-Based Model features a royalty fee of $4.95 per FICO Score, a 50% reduction from previous average per-score fees, and a $33 funded-loan fee per borrower per score upon loan closure. The Per-Score Only Pricing Model maintains a $10 fee per score, mirroring the average price previously charged by credit bureaus. These models aim to reduce "unnecessary mark-ups" added by credit bureaus, thereby driving cost savings for mortgage lenders.

The immediate impact on the market has been profound. On October 2, 2025, shares of TransUnion (TRU) and Equifax (EFX) plummeted by approximately 12.5% and 8.7%, respectively, while FICO's stock soared, reflecting investor confidence in the company's strategic pivot. This disintermediation threatens the established revenue streams of credit bureaus, which have traditionally served as intermediaries for FICO scores.

FICO's move is seen as a response to growing regulatory pressure, including criticism from Federal Housing Finance Agency (FHFA) Director Bill Pulte, who has advocated for lower credit scoring costs and greater competition. The shift could ease some regulatory pressure on FICO while potentially intensifying antitrust scrutiny.

The broader implications extend beyond the immediate financial performance of a few companies. This move signifies a broader trend of disintermediation within the financial services sector, driven by technological advancements and a demand for greater efficiency and transparency. Mortgage lenders and brokers are poised to be primary beneficiaries, gaining immediate cost savings and increased price transparency. This could translate into improved margins for lenders or lower costs for borrowers, enhancing affordability in the mortgage market.

However, the move also intensifies competitive pressures on credit bureaus, who must innovate, differentiate their offerings, and potentially restructure their business models to compensate for the lost revenue from FICO Score markups. They may need to promote alternative scores, enhance value-added services, and focus on other credit products and market segments where their intermediary role remains strong.

In conclusion, FICO's strategic shift in mortgage scoring represents a significant disintermediation that could reshape the competitive landscape and profitability of key players in the credit reporting industry. As the financial sector continues to evolve, this move underscores the importance of innovation and adaptability in maintaining a competitive edge.