Key Stats for FICO Stock
- Price Change for $FICO stock: 18%
- Current Share Price: $1,785
- 52-Week High: $2,402
- $FICO Stock Price Target: $1,893
What Happened?
Fair Issac Corp. (FICO) stock surged 18% on Thursday after the credit scoring giant unveiled a major shift in how it prices and distributes its flagship credit scores to the mortgage industry.
The Montana-based analytics company announced it will now license its FICO Scores directly to mortgage resellers, allowing them to bypass credit bureaus entirely.
The new FICO Mortgage Direct License Program gives lenders two pricing options.
Under the “performance model,” lenders pay $4.95 per score (a 50% reduction from the current average fees) plus a $33 funded loan fee when a mortgage closes.
This replaces the old system where credit bureaus marked up FICO’s scores by roughly 100% before passing them to lenders. Alternatively, lenders can opt for a flat $10 per score model with no closing fee, matching what they currently pay to credit bureaus.
CEO Will Lansing framed the move as bringing transparency and competition to an industry that’s been operating the same way for decades.
“This change eliminates unnecessary mark-ups on the FICO Score and puts pricing model choice in the hands of those who use FICO Scores to drive mortgage decisions,” he said.
The announcement hammered credit bureau stocks. Shares of Experian, TransUnion, and Equifax dropped between 4% and 10% as investors worried about losing their lucrative role as middlemen in the mortgage scoring process.
FICO will still offer both pricing models to the three bureaus on the same terms, but the company can’t control what markups they add.
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What the Market Is Telling Us About FICO Stock
The massive rally in FICO stock suggests Wall Street believes this pricing restructure will significantly improve the company’s economics.
Raymond James analyst Patrick O’Shaughnessy called it a move that “will ultimately disintermediate credit bureaus from their current ~100% mark-up on the FICO score” while reiterating his outperform rating on the shares.
FICO had been under political pressure from Federal Housing Finance Agency director Bill Pulte, who in late July criticized the entity as a “monopoly” with unfair price hikes.
On Thursday, Pulte posted on X that FICO’s new program marks an effort to “generate Creative Solutions to help the American consumer” and encouraged credit bureaus to follow suit with “creative and constructive actions.”
During the recent earnings call, management discussed the FHFA’s controversial decision to allow “lender choice” between FICO and its competitor, VantageScore, for conforming mortgages.
While that decision created some investor anxiety, FICO has maintained that its scores remain far more predictive and that switching away from the industry standard creates safety and soundness risks for the mortgage market.
With this new direct licensing program, FICO appears to be going on offense rather than playing defense.
By cutting out the credit bureau markup and offering flexible pricing, FICO is betting it can maintain its dominant position (used by 90% of top U.S. lenders) while actually improving its own profit margins.
The funded loan fee structure also recognizes that FICO Scores provide value throughout the mortgage lifecycle, not just at origination.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
