Credit Bureau Stocks Slide as FICO Launches Direct Mortgage Score Licensing

Shares of major credit reporting companies tumbled on Thursday after Fair Isaac Corp (FICO.N), the U.S. data analytics firm behind the widely used FICO score, unveiled a program allowing mortgage resellers to calculate and deliver credit scores directly to consumers.

Analysts warned the move could squeeze revenue and margins at the three leading U.S. credit bureaus—Experian, Equifax, and TransUnion—which have traditionally provided credit data and FICO scores for mortgage underwriting.

The FICO score, developed by Fair Isaac, remains the most widely adopted credit scoring system in the United States, relied upon by major lenders to assess borrower creditworthiness. Higher scores indicate lower default risk.

“This effectively reduces the margin Experian and Equifax earn on FICO credit scores,” Citigroup analysts wrote in a note. “Our initial reaction is that this is negative for Experian and Equifax.”

Experian (EXPN.L) shares fell 5% in London, while U.S.-listed Equifax (EFX.N) dropped 11% in premarket trading and TransUnion (TRU.N) slipped 9%.

Fair Isaac said the change would bring greater price transparency and immediate cost savings for mortgage lenders, brokers, and other industry participants. Companies that prefer to continue working through credit bureaus can still do so, it added.

However, the shift could intensify competition in the credit scoring business by giving lenders more direct access to FICO scores.

“By launching a licensing program for tri-merge resellers, FICO is effectively stripping the credit bureaus of their ability to mark up FICO scores,” analysts at Jefferies noted. The brokerage estimated the new model could reduce bureau earnings by 10% to 15% on average.

“To set prices, bureaus will now have to negotiate directly with lenders while also competing against each other,” Jefferies added.