FICO Launches Direct-to-Lender Credit Reporting Program

Streamlining distribution optimizes costs for both resellers and consumers, as well as increases transparency, FICO said.

A new program could potentially reshape the way mortgage lenders access customers’ credit scores. Casper1774 Studio/Shutterstock

Fair Isaac Corp. (FICO) of Bozeman, Montana, launched on Oct. 1 a program that could potentially reshape the way mortgage lenders access customers’ credit scores by sidestepping the country’s three primary credit-reporting agencies.

FICO’s mortgage direct licensing program allows “tri-merge resellers”—companies that bundle credit history data from Equifax, TransUnion, and Experian into a merged credit report—to bypass the credit-reporting bureaus and calculate and distribute FICO scores directly to mortgage lenders.

Streamlining distribution optimizes costs for both tri-merge resellers and consumers, FICO said, as well as increases transparency. Currently, lenders pay a per-score fee of $10. Under the new direct licensing program, however, lenders will pay a royalty licensing fee of $4.95 per score, eliminating a 50-percent markup enacted by credit-reporting agencies.

There’s an additional one-time fee of $33 per borrower when a loan that uses FICO scoring closes, which replaces the fee model of recharging borrowers every time their FICO score is reissued downstream to mortgage insurers, government-sponsored enterprises such as Fannie Mae and Freddie Mac, investors, and rating agencies. Lenders can opt to remain on their current pricing models or adopt the new performance model, FICO noted.

“Today marks a turning point in how credit scores are delivered and priced across the mortgage industry,” FICO’s Chief Executive Officer Will Lansing said.

“Direct licensing of the FICO score brings transparency, competition, and cost-efficiency to the mortgage lending process. 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.”

The news from FICO roiled equity markets, with FICO’s shares surging more than 26 percent in early trading to a high of $1,998 on Oct. 2 before retreating. Shares of Equifax, TransUnion, and Experian, meanwhile, all plummeted.

FICO said it will offer its new pricing model to the three credit-reporting bureaus, though it lacks oversight on any cost markups those agencies choose to enact.

FICO expects to have its new direct licensing program rolled out as early as Jan. 1, 2026, with tri-merge resellers who chose to adopt the pricing model. FICO also said it’s working with those resellers to implement new software so they can update their workflow and pricing models.

FICO scores are used by about 90 percent of lenders to determine creditworthiness. Scores range from 300 to 850, with scores above 670 considered creditworthy with a “good” rating.

The Epoch Times reached out to Equifax and Experian for comment and did not receive a response by publication time. TransUnion deferred to the Consumer Data Industry Association (CDIA), a Washington, D.C.-based group that represents consumer reporting agencies.

The CDIA said in a statement that FICO’s direct licensing program introduces operational costs and increased risk to resellers and lenders.

“FICO is also ignoring the reality that comprehensive data is the foundation of powerful and predictive credit scores, which help protect the health of the U.S. mortgage market,” the CDIA said.

“This new pricing scheme validates the need for a competitive mortgage scoring market. The combination of trended credit information and the VantageScore 4.0 score will help drive greater financial inclusion and improve the safety and soundness of the mortgage market.”

VantageScore 4.0 is a newer credit scoring method developed by the three major credit-reporting agencies. This summer, the Federal Housing Finance Agency allowed lenders to choose between the classic FICO scoring method and VantageScore 4.0 to determine borrowers’ creditworthiness.