FICO shares drop after FHFA moves Fannie Mae and Freddie Mac to a unified pricing grid

Your credit score is one of the most important data points associated with your identity. A good score generally means lower interest rates on everything from credit cards to mortgages, while a bad score can subject you to higher rates. When it comes to mortgages, for decades lenders only relied on data from one company: Fair Isaac Corporation (NYSE: FICO), the owner of the eponymous FICO score. But newly announced changes mean lenders can now pull data from one of Fair Isaac Corporation’s main competitors, VantageScore Solutions, instead—and FICO stock has been sinking because of it. Here’s what you need to know. What’s happened? On Monday, the director of the Federal Housing Finance Agency (FHFA), William J. Pulte, announced that Fannie Mae and Freddie Mac will transition to a single mortgage-pricing grid that includes both FICO scores and credit scores from competitor VantageScore. “We are Simplifying Mortgage Pricing following feedback from lenders and consumers,” Pulte wrote. “Instead of two separate pricing grids, which makes zero sense, Fannie and Freddie are hereby moving to ONE PRICING GRID with VantageScore joining the existing FICO Classic pricing grid.” Historically, when a lender wanted to originate a mortgage backed by Freddie Mac or Fannie Mae, they had to obtain a FICO score for the individual, as noted by Investing.com. Fair Isaac Corporation made money from each FICO score pulled. But the new single mortgage-pricing grid means that lenders can now pull a VantageScore instead, ending Fair Isaac Corporation’s decades-long dominance in the industry. What does this mean for lenders? For virtually the first time, mortgage lenders can choose which score to use: FICO or VantageScore. Whoever they choose earns a fee for the credit score pull.  And since lenders now have two companies to choose from, those companies will have to compete on credit score pull price, which should drastically lower what lenders have traditionally paid for credit score pulls. What does this mean for consumers? Lenders (and VantageScore) are the biggest beneficiaries of the change, but there could also be some benefits for consumers. Broadly speaking, a VantageScore 4.0 credit score uses additional data, like rent payments, to calculate a person’s score than classic FICO scores do. This could help people who don’t have a lot of traditional credit history achieve better credit scores (if their rent payments were on time, at least). Of course, this doesn’t necessarily mean that mortgages will be cheaper for those whose lenders choose to pull their VantageScore instead of their classic FICO score. The ultimate mortgage rate will be decided based primarily on the individual’s credit history. What does it mean for Fair Isaac Corporation? It means that, for the first time in decades, Fair Isaac has competition in the Fannie Mae and Freddie Mac space. If Fair Isaac wants lenders to keep using their scores, it is going to have to remain competitive with VantageScore on price. Becoming more competitive on price may mean Fair Isaac earns less profit in the future. And that’s spooking investors. As of this writing, Fair Isaac Corporation’s stock price is plummeting this morning, the first day of trading after the changes were announced. FICO’s stock price is trading down over 24% to just above $635. Year to date, the company’s stock price is now down 60%. In related news that is surely not doing Fair Isaac Corporation any favors this morning, the nation’s largest mortgage lender, Rocket Mortgage, announced yesterday that it has become the first lender to use VantageScore as the preferred credit score provider on all eligible loans. “The mortgage industry has relied on one credit scoring model for decades,” Rocket Mortgage CEO, Jay Bray, said. “Competition is healthy, especially when it can lower costs and expand responsible access to homeownership.” Fast Company has reached out to Fair Isaac Corporation for comment.

FICO Crashes Most Since 2004 As Pulte's Mortgage Score Shakeup Threatens Its Moat Fair Isaac, the company that produces FICO scores, saw its shares crash the most in 22 years early Tuesday in cash trading after Federal Housing Finance Agency Director Bill Pulte announced on X that a mortgage-pricing change that Wall Street analysts say could accelerate adoption of rival VantageScore and undermine FICO's moat.  "We are Simplifying Mortgage Pricing following feedback from lenders and consumers. Instead of two separate pricing grids, which makes zero sense, Fannie and Freddie are hereby moving to ONE PRICING GRID with VantageScore joining the existing FICO Classic pricing grid," Pulte posted on X Monday.  We are Simplifying Mortgage Pricing following feedback from lenders and consumers. Instead of two separate pricing grids, which makes zero sense, Fannie and Freddie are hereby moving to ONE PRICING GRID with VantageScore joining the existing FICO Classic pricing grid. pic.twitter.com/g9h1EqsDca — Pulte (@pulte) September 28, 2026 Pulte cited a press release from Rocket Mortgage that stated: "Rocket Mortgage did an extensive study that helped the company determine VantageScore 4.0 opens access to some clients who wouldn't be served otherwise, and many are able to secure a mortgage on better pricing terms. For those who saved money with VantageScore 4.0, the savings was an average of $1,600 at closing. FHFA and Director Pulte are encouraging competition and innovation in pilot programs." The below is from Rocket Mortgage. Only happens because because of President TRUMP: “Rocket Mortgage did an extensive study that helped the company determine VantageScore 4.0 opens access to some clients who wouldn't be served otherwise, and many are able to secure a mortgage on… — Pulte (@pulte) September 28, 2026 The change gives lenders a stronger incentive to adopt VantageScore, potentially lowering costs for homebuyers while threatening FICO's market share and pricing power. Traders responded by sending FICO shares tumbling 22% earlier this morning - the largest intraday decline since July 13, 2004. Here's what Wall Street analysts had to say (courtsey of Bloomberg):  FT Partners With pricing now in line, VantageScore could see increased adoption, with a lower hurdle for more favorable LLPA pricing, says analyst Craig Maurer The move will allow more borrowers to qualify for lower rates, adding to VantageScore's existing cost advantage Under a common LLPA grid, borrowers whose VantageScore 4.0 exceeds their classic FICO scores could qualify for a more favorable pricing bucket when selected TD Cowen The news presents a risk to FICO because it's not about which model is more predictive of defaults; it's about the regulators shifting LLPA pricing to get lenders to use VantageScore over FICO, says housing policy analyst Jaret Seiberg One long-term worry is that it creates an incentive for FICO and VantageScore to compete on producing scores that result in lowest LLPAs rather than on the risk of default RBC (rates FICO as outperform) The news meaningfully raises the risk of score shopping, where lenders select whichever model produces the more favorable credit score and a lower mortgage interest rate, says analyst Ashish Sabadra With unified pricing, VantageScore's market share gains could accelerate Another risk is FICO may need to hasten its shift away from traditional per-pull origination fees toward other pricing structures to defend its economics Deutsche Bank analyst Faiza Alwy asked clients, "Where is the moat?"  Alwy provided clients with her first take on the developments: Single pricing grid plus Rocket to use VS4 as preferred credit scoring model There were two important and negative developments that happened post-close yesterday. The first one was FHFA Director Pulte indicating on X that based on lender feedback, the GSEs will operate on one LLPA grid and VantageScore 4.0 (VS4) will now join the existing FICO Classic grid. This means that the VS4 20 point discount to FICO has been removed by the FHFA and both scores will now be treated the same by the GSEs. This would likely in and of itself result in higher number of mortgages that will see favorable pricing with VS4 vs. FICO Classic. We would have expected continuing gaming and for lenders to optimize pricing with this change. However, the announcement from Rocket this evening following this change is meaningfully negative and consequential for FICO. Rocket Mortgage announced that it will become the first mortgage lender to use VS4 as its preferred credit scoring model for all eligible loans. Specifically, during 4Q26, the company will default to VS4 for mortgages that will be delivered to GSEs, VA home loans and any other eligible mortgages. The company noted that after four months of testing, it found that VS4 helped more clients qualify and move forward in the mortgage process, while also reducing credit scoring costs. Rocket is a top mortgage originator with ~5-6% share (possibly higher following the acquisition of Mr Cooper in 4Q25). We're not entirely sure what the words "preferred" and "default" exactly mean at the moment but the worst case interpretation for FICO would be that Rocket Mortgage will not be pulling FICO scores at all when eligible. Important to note that the above excludes mortgages for investment properties and second homes, HELOCs, FHA loans, jumbo loans and some other products. Rocket Pro, the division that provides home loans through mortgage broker partners, will continue to provide both VantageScore and FICO to mortgage brokers. Rocket Pro comprised about 30% of the company's origination volume in 2025. We estimate that in aggregate about both scores would be pulled 50% of the time (at origination). Encouragingly for FICO, Rocket did indicate that they will continue to evaluate new options as they become available (a likely reference to FICO 10T). Could other lenders follow suit? It would make sense to assume that UWM would follow suit but we note that UWM operates exclusively as a wholesale lender and competes directly with RocketPro. Other lenders were not particularly active in the pilot program, so we expected limited movement near-term. What does this mean for FICO's mortgage strategy? FICO's management continues to believe that notwithstanding significant price increases in the last few years, the score remains under-priced relative to the value it is providing. We expect FICO's 2027 approach to pricing to be variable by lender with the company offering and implementing the performance model for some lenders. Ultimately this makes us much less confident with respect to FICO's mortgage revenue algorithm at least in the near-term. That said, we believe the non-GSE securitization market will require FICO Classic for an extended period of time; recall that the FHFA has indicated it will provide both VS4 and FICO on all GSE loans that are securitized to investors. We suspect FICO will attempt to monetize the securitization channel or GSEs. We will revisit our model as we gather additional information and the mechanics of these new late developments. In the interim, we expect FICO stock to understandably react negatively. With FICO's competitive moat under pressure, this new development raises the risk of "score shopping," as lenders select the credit-scoring model that secures the most favorable mortgage pricing for prospective homebuyers. Tyler Durden Tue, 09/29/2026 - 10:55