Credit Bureaus Tumble as FICO Overhauls Mortgage Score Access
Fair Isaac's new direct-to-lender model threatens a core revenue stream for TransUnion and Equifax, sending shares sharply lower.
Shares of major credit bureaus plummeted in trading today after Fair Isaac Corp. (FICO), the creator of the dominant U.S. credit scoring system, announced a radical overhaul that allows mortgage lenders to bypass them entirely. TransUnion (TRU) stock fell approximately 11%, while rival Equifax (EFX) slid 8.5% on the news, which threatens a lucrative pillar of the bureaus' business model.
The sell-off was triggered by FICO's launch of a new , which enables mortgage originators to access FICO scores directly instead of purchasing them through the bureaus. This change is designed to eliminate what FICO described as "unnecessary mark-ups" and introduce significant cost savings and transparency into the mortgage industry.
FICO CEO Will Lansing hailed the initiative as "a pivotal moment in how credit scores are delivered and priced," aiming to foster greater competition and efficiency. Under the new program, lenders can pay as little as half the current average reseller fees for scores, a move that could severely compress the profit margins of intermediaries like TransUnion and Equifax. as one of the most significant shake-ups in the credit-scoring system in decades.
For years, the three major credit bureaus—Equifax, TransUnion, and Experian—have acted as the primary gatekeepers for FICO scores used in mortgage underwriting. By creating a direct channel, that entrenched relationship. While the bureaus will still have the option to participate under the new terms, they will lose their exclusive position and pricing power, a development that investors fear will materially impact future earnings.