FICO provider is shaking up its credit score business. Its stock is surging

Core Insights - Fair Isaac, the creator of the FICO score, experienced a stock rally of over 20% following the announcement of a new pricing model that allows mortgage lenders to bypass credit bureaus for credit scores [1][2] - The new model enables mortgage resellers to license FICO scores directly from Fair Isaac, which can then be distributed to borrowers, potentially impacting the traditional role of credit bureaus [2][4] Company Developments - Fair Isaac's new pricing plan offers lenders a choice between two models, aimed at reducing unnecessary mark-ups on FICO Scores and providing more control to those making mortgage decisions [3] - The stock surge represents Fair Isaac's largest percentage increase since November 22, although shares are still down approximately 9% year-to-date [2] Industry Impact - Following Fair Isaac's announcement, shares of major credit bureaus—Experian, TransUnion, and Equifax—declined between 4% and 10%, indicating investor concerns about the diminished importance of these companies in the mortgage lending process [4] - Fair Isaac intends to offer its new mortgage score pricing models to the three credit bureaus under the same terms, which may further disrupt the existing market dynamics [4]