Fair Isaac falls 21% as Fannie and Freddie move to one pricing grid with VantageScore; scores are 68% of its sales

Shares of Fair Isaac, the company behind the FICO credit score, traded at $666.59 before Tuesday's open, down 20.7% from Monday's close of $840.89, according to Nasdaq quote data. The drop followed a post on X from Federal Housing Finance Agency Director Bill Pulte saying Fannie Mae and Freddie Mac will replace their two separate mortgage pricing grids with one, and that VantageScore will join the existing Classic FICO grid. "Instead of two separate pricing grids, which makes zero sense, Fannie and Freddie are hereby moving to ONE PRICING GRID," Pulte wrote, as quoted by CNBC.

The stock had already slipped 2.6% in Monday's regular session and fell about 8% after hours once the post circulated, Investing.com reported. Tuesday's premarket price leaves it about two thirds below its 52-week high of $1,998.01.

Why a pricing grid matters more than an approval

Lenders have been allowed to use VantageScore 4.0 on loans sold to Fannie and Freddie since September 9, when the two companies opened it to every approved lender without prior sign-off, according to the FHFA. Permission alone does not decide what a lender pays for, though. The grid does. Fannie and Freddie charge risk-based fees, called loan-level price adjustments, that depend largely on a borrower's credit score and down payment, and those fees feed straight into the rate a borrower is quoted. Putting VantageScore on the same grid as FICO means a lender can price a conventional loan off either score on equal terms. FHFA has not said when the single grid takes effect, Investing.com noted.

The number behind the drop

Fair Isaac's own filings show how much rides on this. In the quarter ended June 30, its Scores segment brought in $458.9 million, 68% of total revenue, up from 60% a year earlier, according to the company's 10-Q. Business-to-business score revenue rose 49%, and the company attributed that rise "primarily" to a higher mortgage origination score unit price. The Scores segment's operating margin was 91%, against 26% in software.

That is the part the headline leaves out. The growth investors had been paying for was mostly price, not volume, and price is exactly what a competing score on the same grid puts under pressure. The software business grew 2% in the same quarter.

The competitor's price tag

TransUnion said on Tuesday it will keep charging $0.99 per VantageScore 4.0 mortgage origination score, ordered on its own, through December 2028, and will keep including VantageScore free for lenders who also buy a FICO score, according to its press release. TransUnion said more than 1,100 mortgage lenders adopted VantageScore 4.0 between January and September, including nine of its 15 largest mortgage customers, and that the Federal Housing Administration plans to accept VantageScore-backed loans starting January 1, 2027.

Who it actually hits

For someone closing on a house this fall, nothing changes on Tuesday: the grid has no start date yet, and lenders can already use either score. Once it is live, the practical question for a borrower becomes which score the lender pulls, since the two models weigh things differently. VantageScore 4.0 uses trended data and can count rent and utility payments, per TransUnion. A self-employed buyer with a thin traditional credit file but years of on-time rent is the type of applicant for whom the choice could matter.

For lenders and mortgage brokers, the cost of the credit pull is the line item to watch. The per-score price is small against a loan, but it is paid on every application, including the ones that never close. With mortgage rates near 7.5% in the daily index this week, as we reported Monday, every application that falls through still carries its credit-pull cost.

Fair Isaac had not issued a statement on the grid change in the sources we read. Its next quarterly report, for the fiscal year ending September 30, will be the first to show whether mortgage score pricing has held.

Sources: CNBC; Investing.com via Yahoo Finance; Nasdaq quote data (premarket, 8:51 a.m. ET); Fair Isaac filings on SEC EDGAR; TransUnion; FHFA. This is market information, not investment advice.