FICO Shares Surge on Direct License Program Amid Mortgage Industry Shake-Up

FICO (FICO) shares rose 20% after announcing a direct license program to improve price transparency and reduce costs in the mortgage industry. The program introduces a $4.95 fee per score and a $33 fee per closed loan, decreasing previous re-issue costs. Major credit reporting firms, such as Equifax, TransUnion, and Experian, experienced declines in their stock prices following the announcement.

Fair Isaac Corporation (NYSE: FICO) has made a significant move in the financial landscape with the launch of its "FICO Mortgage Direct License Program," effective October 1, 2025. This strategic initiative aims to enhance price transparency and reduce costs within the mortgage industry by allowing lenders and tri-merge resellers to access FICO Scores directly from FICO, bypassing traditional credit reporting agencies (CRAs) like TransUnion (NYSE: TRU) and Equifax (NYSE: EFX). This development has sparked immediate market reactions, with FICO's stock surging by 20% to 24% while shares of major credit bureaus plummeted FICO's Direct Mortgage Play Threatens Credit Bureaus' Mortgage Dominance^[1].

The program introduces two pricing models: a Performance-Based Model with a $4.95 royalty fee per FICO Score, representing a 50% reduction from previous average per-score fees, and a $33 funded-loan fee per borrower per score for closed loans. This replaces previous re-issue costs, allowing broader use of FICO Scores throughout the mortgage origination process. Additionally, a Per-Score Only Pricing Model maintains a $10 fee per score, mirroring previous charges by credit bureaus FICO's Direct Mortgage Play Threatens Credit Bureaus' Mortgage Dominance^[1].

FICO's move is a response to growing regulatory pressure and calls for increased price transparency. Federal Housing Finance Agency (FHFA) Director Bill Pulte has praised the initiative, viewing it as a step towards more competitive solutions for consumers. However, this shift also intensifies scrutiny on FICO's near-monopoly position and could invite further antitrust attention FICO's Direct Mortgage Play Threatens Credit Bureaus' Mortgage Dominance^[1].

The immediate impact on credit bureaus has been negative, with stock prices declining and potential earnings hits predicted. TransUnion and Equifax will need to adapt their business models, potentially by promoting alternative scores, enhancing value-added services, and diversifying their offerings. Mortgage lenders and brokers stand to benefit from cost savings and increased price transparency, while tri-merge resellers could see increased demand for their services FICO's Direct Mortgage Play Threatens Credit Bureaus' Mortgage Dominance^[1].

This development signifies a broader trend of disintermediation within the financial services sector, driven by technological advancements and a demand for greater efficiency and transparency. FICO's move aligns with a wider industry push for direct-to-business models, allowing intellectual property holders to exert more control over their revenue streams FICO's Direct Mortgage Play Threatens Credit Bureaus' Mortgage Dominance^[1].