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Key Takeaways
- FICO stock plummeted Tuesday after FHFA Director William Pulte wrote on X that mortgage companies may now use Vantage 4.0, a credit scoring tool developed by FICO’s competitors.
- Lenders currently use “classic” FICO scores, but the government has been planning to adjust this policy for almost three years.
- Shares of the companies that created the VantageScore, including TransUnion, Equifax, and Experian, rose slightly.
Shares of Fair Isaac (FICO), the company synonymous with its FICO credit score model, plunged after the FHFA said mortgage companies may now use a credit scoring system created by its competitors.
“Effective today, to increase competition in the Credit Score Ecosystem and consistent with President Trump’s landslide mandate to lower costs, Fannie and Freddie will ALLOW lenders to use Vantage 4.0,” Federal Housing Finance Agency Director William Pulte said Tuesday on X.
Fannie Mae and Freddie Mac, the government-sponsored enterprises designed to back the residential mortgage market, currently require lenders to use the “classic” FICO credit score model to assess applicants. FHFA, which oversees Fannie Mae and Freddie Mac, did not immediately respond to a request for comment.
Today’s announcement comes almost three years after the FHFA said it would require lenders to move to newer scoring systems from both FICO and VantageScore, an alternative scoring tool developed by the three major credit bureaus, Equifax, Experian, and TransUnion.
FICO shares fell nearly 9% on Tuesday, ending off intraday lows. TransUnion (TRU) shares finished the day up more than 1%, as did the U.S.-listed of Experian. Shares of Equifax (EFX) ended about flat.
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