FICO Shares Soar 25% on Plan to Bypass Credit Bureaus
New direct-to-lender model for mortgage scores shakes up the credit reporting industry, sending bureau stocks tumbling.
Fair Isaac Corporation (FICO) saw its stock surge nearly 25% to a staggering $1,884.66 after announcing a strategic pivot in its business model that directly challenges the big three credit bureaus. The company unveiled a new direct-to-lender licensing program for mortgage scores, effectively bypassing the traditional intermediaries.
The move sent shockwaves through the financial data industry. While FICO's shares soared, the stocks of major credit bureaus took a significant hit. Experian, Equifax, and TransUnion by 8%, 12%, and 11% respectively, as investors reacted to the threat posed to a core part of their revenue stream.
FICO's "Mortgage Direct License Program," set to take effect in October 2025, is designed to increase price transparency and reduce costs for mortgage lenders. By allowing lenders and resellers to acquire FICO scores directly, the company aims to eliminate the mark-ups traditionally added by the bureaus. This and signals a major shift in how credit data is distributed and priced.
The announcement was met with enthusiasm from Wall Street analysts. Barclays raised its price target for FICO to $2,400, while Needham reiterated a "Buy" rating with a $1,950 target. Analysts at Jefferies estimate the change could impact the earnings of credit bureaus by as much as 10% to 15%, highlighting the material nature of FICO's strategic shift.
This dramatic stock performance comes amid notable insider and institutional activity. Over the past six months, FICO insiders have made over 200 sales with no purchases, including a significant sale by CEO William J. Lansing. However, institutional investment remains strong, with in the most recent quarter, demonstrating a continued, and now clearly justified, confidence in the company's growth trajectory.