TransUnion Stock Forecasts: Morningstar Analyst Provides Insights

TransUnion, a leading credit bureau, provides consumer information and services such as fraud detection, marketing, and analytics. Analyst Rajiv Bhatia expects the company to benefit from its pricing and strategy details, leading to fair value and economic moat. The report is available for download from Morningstar Research Services LLC.

TransUnion (NYSE: TRU), a leading credit bureau, experienced a significant downturn in its stock price on October 2, 2025, following Fair Isaac's (NYSE: FICO) strategic launch of a new direct pricing option for mortgage lenders. The market's immediate reaction underscores the perceived threat to the established order within the credit reporting industry.

Fair Isaac's "FICO Mortgage Direct License Program," effective from October 1, 2025, allows mortgage lenders and tri-merge resellers to license FICO Scores directly from Fair Isaac, effectively cutting out the traditional role of credit bureaus as intermediaries. This development has sent ripples throughout the financial markets, prompting investors to re-evaluate the long-term profitability and market positions of the affected companies.

The program introduces two new pricing structures designed to enhance transparency and reduce costs for lenders. The first option features a royalty fee of $4.95 per score, representing a 50% reduction from average fees previously paid to tri-merge resellers. Additionally, a $33 funded-loan fee per borrower per score applies upon the closing of a FICO-scored loan, replacing former re-issuance charges. Alternatively, lenders can opt for a per-score model at $10 per score, mirroring the average price historically charged by credit bureaus.

The implications for major credit agencies are profound. Previously, credit bureaus served as the primary conduit for lenders to access FICO scores, adding their own margins to the cost. By enabling direct licensing, Fair Isaac effectively removes a significant revenue stream and profit margin for these bureaus. Industry experts estimate that this change could impact credit bureau earnings by an average of 10% to 15%.

The market's immediate reaction on October 2, 2025, was stark. While TransUnion, Equifax (NYSE: EFX), and Experian (LSE: EXPGY) shares plunged, Fair Isaac's (NYSE: FICO) stock soared, with gains reported between 14.63% and an impressive 32% on the day, reaching new highs. This dramatic divergence highlights a clear shift in investor confidence, favoring Fair Isaac's strategic repositioning within the industry.

Analyst Rajiv Bhatia of Morningstar Research Services LLC expects TransUnion to benefit from its pricing and strategy details, leading to fair value and economic moat. The report is available for download from Morningstar Research Services LLC.

The broader market on October 2, 2025, saw mixed performance, but the FICO announcement was undeniably the dominant factor reshaping the financial services sector.

Fair Isaac emerges as the clear winner in this strategic maneuver. By offering direct licensing of its proprietary FICO Scores, the company strengthens its control over its core product, captures a larger share of the revenue generated from its scores, and enhances its market position. This move also addresses long-standing industry demands for pricing transparency and potentially pre-empts future regulatory scrutiny regarding its historical pricing practices.

Conversely, major credit reporting agencies like TransUnion, Equifax, and Experian are the immediate losers. Their stock prices plummeted as investors reacted to the erosion of a significant revenue stream. These companies have historically profited from their role as intermediaries in the distribution of FICO Scores to mortgage lenders. With lenders now able to bypass the bureaus, a substantial portion of their mortgage-related revenue and profit margins is at risk.

The potential ripple effects on competitors and partners are substantial. Other credit scoring models or alternative data providers might see this as an opportunity to gain market share, especially if credit bureaus struggle to adapt. Furthermore, the increased competition could spur innovation in credit assessment, leading to new products and services that offer more granular or inclusive evaluations of creditworthiness.

In the short term, TransUnion, Equifax, and Experian will likely focus on damage control and strategic adjustments. This could involve exploring new revenue streams, enhancing their proprietary credit scoring models, or offering differentiated services that go beyond mere FICO Score distribution. There may also be increased lobbying efforts to influence regulatory discussions surrounding credit data access and pricing. Investors will closely watch for any announcements regarding new partnerships, acquisitions, or product launches aimed at mitigating the impact of Fair Isaac's move.

Long-term possibilities include a more fragmented credit scoring market, where lenders have a wider array of options beyond the traditional credit bureau offerings. This could foster greater innovation in credit assessment, potentially leading to more accurate and inclusive evaluations of credit risk. Credit bureaus may need to pivot their business models to focus more on value-added services such as fraud detection, data analytics, and identity protection, rather than relying heavily on their role as FICO Score distributors.

Market opportunities could emerge for FinTech companies that can provide seamless integration of direct FICO Score access for lenders or develop alternative, robust credit scoring solutions. Challenges will undoubtedly arise for the incumbent credit bureaus, requiring significant strategic pivots and adaptations to maintain relevance and profitability in a rapidly evolving landscape.

This event signals a new era for credit assessment in mortgage lending, one characterized by increased directness, competition, and a renewed focus on value for lenders and consumers alike.