Fair Isaac to Allow Lenders to Bypass Credit Bureaus for FICO Scores. The Stock Is Surging.

Fair Isaac’s said its new pricing models would increase “cost-efficiency” in mortgage lending. (Dreamstime)

Key Points

• Fair Isaac introduces new pricing models allowing mortgage lenders to directly access FICO Scores, bypassing credit bureaus.
• Lenders can now pay Fair Isaac $33 per borrower per score upon loan closure, avoiding credit bureau markups.
• Fair Isaac shares rise sharply while TransUnion and Equifax tumble.

Shares of Fair Isaac were surging Thursday after the credit scoring company unveiled new pricing models that will allow mortgage lenders to calculate and distribute FICO scores directly to borrowers.

Lenders currently rely on the three nationwide credit bureaus— TransUnion , Equifax , and Experian —to provide FICO scores. The bureaus pay a wholesale fee of $4.95 per score. But score resellers can now choose to bypass the credit bureaus through two different direct license options.

Fair Isaac’s performance-based model allows companies to pay the usual $4.95 fee plus $33 per borrower per score when a FICO-scored loan is closed. A second option allows lenders to pay $10 per score, which Fair Isaac says is the average price charged by credit bureaus.

“Direct licensing of the FICO Score brings transparency, competition, and cost-efficiency to the mortgage lending process,” said Fair Isaac CEO Will Lansing. “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.”

Fair Isaac stock was rising 20% in premarket trading, making it by far the top performer in the S&P 500 . The stock was on pace for its largest single-day gain since Nov. 10, 2022, according to Dow Jones Market Data.

Equifax and TransUnion tumbled 9.6% and 10%, respectively, while Experian was down 4.4% in London trading.

Write to Nate Wolf at nate.wolf@barrons.com