How I Made $5000 in the Stock Market

Fair Isaac Stock Scores Big With Pricing Change. Credit Bureaus, Not So Much.

Oct 03, 2025 15:55:00 -0400 by Nate Wolf | #Financials #Feature

Fair Isaac has been on the receiving end of criticism from Federal Housing Finance Agency Director Bill Pulte. (Michael Nagle/Bloomberg)

Key Points

There has been nothing fair or otherwise about credit-scorer Fair Isaac’s stock performance this year—but a change to its pricing had shares heading in the right direction, even as it hammered credit bureaus Equifax, TransUnion, and Experian.

Fair Isaac stock entered this past week down 24% for the year after being on the receiving end of criticism from Federal Housing Finance Agency Director Bill Pulte. Fair Isaac is the producer of the FICO Score, used to judge the creditworthiness of anyone who wants to borrow money to buy a house, a car, or other big-ticket items.

Pulte accused the company of being a “monopoly who has ripped off Americans for decades,” and permitted mortgage giants Fannie Mae and Freddie Mac to use a product from competitor VantageScore if they chose.

Pulte talked, and Fair Isaac listened. This past week the company announced big changes to its pricing model. Mortgage lenders are now able to calculate and distribute FICO scores directly to borrowers and bypass the three nationwide credit bureaus—TransUnion, Equifax, and Experian.

Resellers—Wall Street’s name for mortgage brokers and others who buy and sell home loans—can either pay $10 a score, what Fair Isaac says the bureaus sell the scores for, or a $4.95 fee plus an additional $33 per borrower per score when the loan is closed. The new pricing model essentially removes the middleman and even seemed to please Pulte, who welcomed the announcement as a “first step” in a social media post Thursday. Fair Isaac stock gained 22% this past week.

The move “accomplishes two goals with a single action,” writes Seaport Research Partners analyst John Mazzoni. First, it should take the regulatory heat off Fair Isaac by removing what was a markup to the scores by the credit bureaus, even as the price of pulling a score doubles.

Second, it allows Fair Isaac to claim a greater share of the overall credit-scoring revenue. While Mazzoni expects application volumes to decline by 10% to 30% as some lenders move away from “tri-merge” scores that incorporate data from all three bureaus, he expects the pricing to more than make up for the difference.

“While industry feedback is still evolving, [mortgage brokers and other resellers] are likely to champion this program as it decreases credit decisioning costs,” writes Mazzoni, who notes that the new pricing should create $250 million in new revenue in fiscal 2026, and boost earnings to $41.36 a share, up from his previous estimate for $35.37. He also raised his price target to $2,200, up 22% from a recent $1,800.

Fair Isaac’s gain is the credit bureaus’ loss. Shares of Equifax fell 7.2% this past week, while TransUnion dropped 9.7%, as investors tried to wrap their heads around potential damage from Fico’s changes.

JPMorgan analyst Andrew Steinerman estimates that Equifax and TransUnion could each take a $200 million hit to 2025 revenue, while Equifax’s earnings could be lower by 6% and TransUnion’s by 8%. He’s quick to point out that those numbers are theoretical—he expects the companies to respond by raising prices and urging a shift to VantageScore—and that the response is overdone.

He isn’t the only one. Morgan Stanley analyst Toni Kaplan notes that, while the change may have caught the credit bureaus off guard, it doesn’t cut them out of the mortgage lending process. In fact, the bureaus still own the credit data and have an alternative scoring system, providing leverage as they formulate a response. One response could be to charge more for the data Fair Isaac uses. “Without the underlying credit history, you cannot calculate a credit score,” writes Kaplan.

Another option for the credit bureaus is to be more aggressive in promoting VantageScore, a joint venture of the three bureaus that many lenders are already testing as a FICO-score alternative, according to Morgan Stanley.

Either way, the credit bureaus aren’t in crisis. And they could benefit from rate cuts, better consumer credit, and potential for an increase in mortgage applications in the years ahead, providing a boost to their stocks.

Writing separately on Experian, which is based in the U.K., Morgan Stanley analyst Annelies Vermeulen had an even simpler take: “Buy the dip.”

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