Analysts view Fair Isaac Corp. (FICO)’s decision to hold its wholesale pricing for mortgage lenders and brokers under its Preferred Program at $10 for 2027 as a defensive move to capture volume amid rising competition from VantageScore.
Following the announcement, Federal Housing Finance Agency (FHFA) Director Bill Pulte said on social media that the agency is “taking more action this week to ensure competition is real and not fake, or manipulated.”
“Abusive monopolies will not be allowed to take advantage of consumers anywhere in the mortgage market,” Pulte wrote on X on Monday afternoon. “Market participants who use modern credit scores help lower risk and increase safety and soundness.”
A spokesperson for FICO did not immediately respond to HousingWire’s request for comment.
The flat $10 wholesale price will apply to lenders and brokers that purchase tri‑merge credit reports via resellers that commit to pulling FICO scores on 100% of mortgage applications, including both soft and hard pulls. The pricing covers a bundle of Classic FICO and FICO Score 10T. Analysts note this is only one of FICO’s mortgage score price offerings for 2027, with others undisclosed at this time.
The mortgage industry is preparing for a multiyear transition in conventional mortgage credit score requirements. The Federal Housing Administration (FHA) will begin accepting Classic FICO, FICO 10T and VantageScore 4.0 for eligible mortgages starting Jan. 1, 2027.
Fannie Mae and Freddie Mac have already started accepting VantageScore 4.0 and have signaled plans to accept FICO 10T. FHFA also put Classic FICO and VantageScore 4.0 loans under the same loan‑level pricing adjustments for GSE purchases, effectively placing the scores on a single pricing grid.
Waterfalling strategy
Mizuho analysts characterized FICO’s pricing initiative as partly aimed at neutralizing “waterfalling” strategies, in which lenders might pull a lower‑cost score such as VantageScore first and only order FICO for a subset of loans.
“The Preferred Program is designed to neutralize this potential score optimization strategy,” the analysts wrote on Friday. “In the Preferred Program, enrolled lenders pay for a FICO score on every pull, soft and hard, so ordering VS4 first no longer reduces lender cost, and FICO volume at those lenders is protected. On account of the nonexclusive program, lenders can still pull VS4, but it is incremental to FICO.”
Previously, Mizuho assumed about 5% pricing growth for FICO’s mortgage scores in 2027. The firm now models flat pricing instead and said it continues to expect VantageScore 4.0 adoption in mortgages but sees limited near‑term FICO volume loss. The inclusion of both Classic FICO and FICO Score 10T in the bundle is expected to support gradual adoption of 10T over time.
A reseller executive told HousingWirethat the new Preferred Program pricing could increase costs for lenders, even with the $10 pricing maintained, because “every lender I am talking to said they will now pull FICO and Vantage.”
UBS analysts noted that the pricing announced by FICO excludes funding, closed‑loan and success fees, and that the program takes effect upon enrollment rather than on Jan. 1, 2027. Economics for the Preferred Program flow from the reseller to FICO and, according to UBS, do not require approval by the FHFA or the government‑sponsored enterprises. Contractual commitments remain in place even if FHFA ultimately changes or replaces the current tri‑merge credit report structure.
UBS said it expects investors to focus on 2027 mortgage pricing, market share shifts and the ramp-up of the recently approved FICO Direct License model when FICO reports fiscal fourth‑quarter 2026 results on Nov. 4.
“While we monitor the developing industry landscape and acknowledge potential lender volume commitments amid ongoing mortgage scoring and credit infrastructure changes, we remain neutral and lower our price target to $972 from $1,100 amid uncertainty,” the UBS analysts said of FICO stock, which closed at $700, down almost 8%, on Monday.
