FICO Unveils New Pricing Models for Mortgage Lenders, Bypassing Credit Bureaus
Fair Isaac Corporation (FICO), the U.S. leader in credit scoring, has unveiled new pricing models for mortgage lenders. This allows them to obtain FICO scores directly from the company, bypassing traditional credit bureaus like Experian. The move comes amid a potential threat from credit bureaus offering an alternative, VantageScore 4.0.
The first pricing option is $4.95 per FICO score plus an additional $33 fee if the scored loan closes. The second option is a flat $10 fee per score, regardless of loan closure. FICO's actions aim to reduce overall end costs for lenders by eliminating credit bureau intermediaries, despite the significant price increase.
Federal Housing Finance Agency Director Bill Pulte appeared to support FICO's moves on X (formerly Twitter). Meanwhile, FICO shares surged 20.5% as of 2:05 p.m. ET on Thursday. Despite this, The Motley Fool's Stock Advisor service did not include FICO in its list of the 10 best stocks for investors to buy now, citing FICO's high valuation and evolving competitive landscape in the business of credit scoring.
Fair Isaac Corporation's new pricing models aim to strengthen its position in the market, offering lenders direct access to FICO scores while potentially reducing costs. The company's share price has responded positively to these moves, but investors should consider the evolving competitive landscape and high valuation when making decisions about loans and investments.
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