Mortgage lending may never look the same after FICO’s latest shake-up

Core Insights - Investors are reacting positively to Fair Isaac Corp.'s new pricing model for FICO scores, leading to a stock price increase of over 20% [1] - The new model allows mortgage lenders to calculate and distribute credit scores directly to borrowers, potentially saving them up to 50% on per-score FICO fees [1][3] - The change is seen as a response to calls for increased competition and lower prices in the mortgage lending market [3][4] Company Developments - Fair Isaac Corp. faced criticism from Bill Pulte, director of the Federal Housing Finance Agency, regarding a previous price hike for credit scores [4] - The company has introduced a direct licensing program, which was previously considered but not implemented until now [3][4] - The stock price surge follows a significant decline of nearly 41% over the past three months due to the criticism [5] Industry Context - The FICO score is utilized by 90% of top U.S. lenders to assess borrower creditworthiness [2] - The introduction of the new pricing model is expected to lead to lower costs in the mortgage lending system, benefiting consumers [4] - Pulte expressed appreciation for FICO's response to criticism, indicating a positive shift towards more competitive practices in the credit scoring market [6]