Source: RTRS
Sept 29 (Reuters) - Shares of Fair Isaac FICO.N slumped on Tuesday after the US federal housing regulator said it was studying changes to credit report use to lower borrowing costs, threatening FICO's long-standing grip on US mortgage credit scoring.
In posts on social media platform X, Federal Housing Finance Agency director Bill Pulte said mortgage finance firms Fannie Mae and Freddie Mac will move to a single pricing grid carrying both VantageScore and FICO scores, effectively putting the two rivals on equal footing.
Fair Isaac's shares dropped 27% on Tuesday, hitting their lowest levels since January 2023, and were set for their biggest one-day slide since May 1989.
Its FICO score is considered the standard for measuring consumer credit risk across banks, credit card issuers and mortgage and auto lenders, while VantageScore was developed as a rival by Equifax EFX.N, Experian EXPN.L and TransUnion TRU.N.
Fair Isaac did not immediately respond to a Reuters request for comment.
"This would likely in and of itself result in higher number of mortgages that will see favorable pricing with VS4 (VantageScore model) vs. FICO Classic," Deutsche Bank analysts said in a note.
Rocket Companies' RKT.N Rocket Mortgage said on Monday it will become the first mortgage lender to switch to VantageScore 4.0 as its preferred scoring model for all eligible loans.
"The worst case interpretation for FICO would be that Rocket Mortgage will not be pulling FICO scores at all when eligible," the analysts added.
Equifax and TransUnion dropped 3.2% and 5%, respectively, on Tuesday, while London-listed Experian slipped 1.8%.
Pulte, who has repeatedly accused FICO of unduly keeping consumer costs high, announced earlier this month that he had directed Fannie Mae and Freddie Mac to approve all lenders to use VantageScore.