Credit Score Wars Heat Up: Equifax Strikes Back at FICO

Equifax leads S&P 500 gainers after slashing mortgage credit score prices in response to FICO's move to limit the mortgage industry's reliance on credit bureaus. FICO is among the biggest laggards in the S&P 500, but its gains from last week are mostly intact. The Federal Housing Finance Agency has allowed lenders to use VantageScore 4.0 as an alternative to traditional FICO scores.

Equifax (EFX) has led the S&P 500 gainers after announcing a significant reduction in the pricing of its VantageScore 4.0 mortgage credit scores. The move comes in response to Fair Isaac Corp. (FICO) shifting its pricing model to bypass credit bureaus, which has put pressure on the industry to reduce costs Equifax slashes VantageScore 4.0 pricing as FICO launches new reseller model^[1]FICO bypasses credit bureaus with new program for mortgage lenders^[2]Equifax cuts VantageScore price to compete with FICO direct model^[3].

Equifax has set its VantageScore 4.0 pricing at $4.50 per score through the end of 2027, with free access for the years 2025 and 2026 for certain customers. This move is designed to enhance credit access and compete with FICO's pricing strategy. Equifax's CEO, Mark W. Begor, stated that this pricing reduction is a significant step towards greater competition and aims to provide lenders with the confidence they need to convert to the higher-performing VantageScore Equifax slashes VantageScore 4.0 pricing as FICO launches new reseller model^[1].

FICO, on the other hand, has introduced a new program allowing tri-merge resellers to calculate and distribute its scores directly to mortgage lenders, effectively bypassing the three nationwide credit bureaus. This move aims to reduce the average per-score fee by up to 50%, with a new $4.95 score fee. Lenders can choose between the traditional per-score model at $10 per score or the new performance-based model FICO bypasses credit bureaus with new program for mortgage lenders^[2].

The Federal Housing Finance Agency's (FHFA) decision to allow Fannie Mae and Freddie Mac to purchase loans underwritten with VantageScore 4.0 as an alternative to the Classic FICO score has intensified competition in the credit scoring market. Equifax's pricing reduction and FICO's new program are responses to this increased competition and government pressure to lower mortgage closing costs Equifax slashes VantageScore 4.0 pricing as FICO launches new reseller model^[1]FICO bypasses credit bureaus with new program for mortgage lenders^[2].

While FICO's stock has dropped 2.5% and Equifax's stock has shown little change, the overall impact on the market remains to be seen. Both companies are committed to providing more comprehensive views of consumers' financial profiles, with Equifax including income and employment indicators and alternative data in its credit reports at no extra charge Equifax slashes VantageScore 4.0 pricing as FICO launches new reseller model^[1].