Fair Isaac shares plunge as Fannie and Freddie open door to VantageScore

Shares in Fair Isaac Corp., the company behind the FICO credit score, plunged more than 20 per cent on Tuesday after Federal Housing Finance Agency Director Bill Pulte said Fannie Mae and Freddie Mac will move to a single loan-level pricing grid that includes rival VantageScore alongside FICO Classic.

Fannie and Freddie back roughly 70 per cent of the U.S. mortgage market and for decades required FICO scores for loans they buy or guarantee. Pulte said late Monday the agencies were simplifying pricing “following feedback from lenders and consumers,” replacing two separate grids with one that lets VantageScore — a joint venture of Equifax, TransUnion and Experian — sit on the same footing. Rocket Mortgage chief executive Jay Bray said the lender will make VantageScore its preferred model after comparing how many qualified borrowers each score admits. Analysts warned the shift invites score shopping and could pressure Fair Isaac’s high-margin mortgage franchise even if FICO remains widely used elsewhere in consumer credit.

The sell-off hit as U.S. 30-year mortgage rates hover near 7 per cent and Canadian households already face elevated borrowing costs tied to the Bank of Canada’s path and cross-border rate differentials. Toronto and Vancouver buyers comparing U.S. relatives’ mortgage paperwork will notice a rare crack in FICO’s near-monopoly; Canadian lenders still lean on Equifax and TransUnion scores under different rules, but any durable U.S. pricing shift tends to reshape vendor roadmaps north of the border too.