Fair Isaac Corp., whose Classic FICO score has long been the dominant credit model in mortgage underwriting but is facing increased competition, will cut 15% of its workforce and streamline its operations.
FICO said it will reduce management layers, simplify its operating structure, optimize processes and tools, and integrate AI-driven product development as part of its plan, according to a filing with the Securities and Exchange Commission (SEC) on Tuesday. The company had 3,811 employees at the end of September 2025.
The workforce reduction began this week and is expected to be completed by the end of the third quarter of fiscal year 2027. FICO estimated it will record about $27 million in pretax charges in the fourth quarter of 2026 tied to severance and related costs.
A spokesperson for FICO did not immediately reply to HousingWire‘s request for comments.
The move comes as federal mortgage regulators and major lenders move to embrace competing credit score models.
In early September, Federal Housing Finance Agency (FHFA) said all Fannie Mae– and Freddie Mac-approved lenders could use either the legacy Classic FICO model or VantageScore 4.0 for loans sold to the government-sponsored enterprises (GSEs).
At the end of last month, FHFA Director Bill Pulte said the GSEs would apply a single loan-level price adjustment (LLPA) grid to mortgages scored with either model.
In response, Rocket Mortgage said last week it plans to make VantageScore 4.0 its default credit model for eligible loans starting in the fourth quarter of 2026. United Wholesale Mortgage (UWM), meanwhile, is taking a dual-score approach, pulling both scores and automatically using the strongest qualifying score for each borrower.
Additionally, PennyMac Financial Services said it has completed a rollout of VantageScore 4.0 across its mortgage production platform, including its consumer direct, broker direct and correspondent channels.
The FICO restructuring is occurring against a backdrop of strong financial results for FICO, driven in part by mortgage demand for its existing scores.
For the third quarter of FY 2026, FICO reported net income of $237.2 million and net cash provided by operating activities of $380.4 million. Total revenues reached $674.2 million, including $458.9 million from scores revenue, a 41% increase from a year earlier.
Business-to-business scores revenue rose 49%, which the company said was primarily attributable to a higher mortgage origination scores unit price.
