FICO Launches Direct Mortgage Score Licensing Disrupting Credit Bureaus

Fair Isaac Corporation (FICO) has launched a direct license program that allows mortgage resellers to calculate and distribute FICO scores directly, bypassing credit bureaus. This initiative aims to increase price transparency and reduce costs for mortgage lenders by offering two pricing models, including a performance-based fee significantly lower than current reseller fees. The announcement caused FICO's shares to surge by around 20-24%, while shares of major credit reporting firms Equifax, TransUnion, and Experian fell sharply. FICO's CEO highlighted the program as a turning point that introduces competition and cost-efficiency into the mortgage lending process, eliminating unnecessary markups on credit scores. However, some industry observers view the move as a defensive response to regulatory and market pressures rather than a disruptive innovation. Despite FICO offering the same pricing models to credit bureaus, it cannot control the markups those bureaus may impose in their channels.