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The New FICO ProgramPress Kit | FICO

FICO’s new program allows tri-merge resellers (which compile scores from the three credit bureaus) to purchase FICO scores directly from FICO, effectively bypassing the three major credit bureaus (Equifax, Experian, and TransUnion) as the middleman.

    • Direct Licensing: Tri-merge resellers can now calculate and distribute FICO Scores directly to their customers, bypassing the three nationwide credit bureaus.
    • Cost Savings: This is expected to drive price transparency and immediate cost savings, with lenders potentially saving up to 50% on per score FICO fees by eliminating credit bureau mark-ups.
Pricing Options:
  • Performance Model: Charges a $4.95 royalty fee per score plus a $33 funded loan fee per borrower per score when the loan is closed.
  • Per-Score-Only Pricing: An alternative option maintains a $10 per score fee into the tri-merge resellers.
FICO’s Rationale:
  • FICO CEO Will Lansing claims the move is a “turning point” that will “drive price transparency and immediate cost savings” by eliminating unnecessary markups on the score.
  • Lansing acknowledged the decision was influenced by pressure from FHFA Director Bill Pulte to increase competition and keep costs down.
In Summary:

Lenders may also continue working directly with the credit bureaus if they choose. Some sources said it is not yet clear what factors will guide lenders’ choice for the resellers or the bureaus in score calculation while others mentioned only pricing. The rationale behind the change, they added, is that more players in the chain will hold each other accountable for pricing.

Mortgage executives said the shift effectively redirects some revenue away from the bureaus by making resellers direct clients of FICO. However, because the bureaus still control essential credit data — including tradeline history — sources warned they may raise fees to offset the lost revenue.

Industry Reactions

Credit Bureaus and Trade Group (Negative)

The Consumer Data Industry Association (CDIA), which includes the credit bureaus, and the bureaus themselves, lambasted the plan:

  • TransUnion criticized the $33 funded loan fee as a “penalty fee,” calculating it could cost a couple purchasing a home $198 ($33 x 3 scores x 2 borrowers).
  • Equifax argued the alternate $10 per-score model essentially doubles costs from the previous wholesale royalty of $4.95.
  • Experian has not release a position statement as of this posting.
  • All claimed the move is a “significant price increase disguised as cost-cutting” that will ultimately lead lenders to “pass on significantly higher costs to consumers.”
Government Oversight (Supportive)

FHFA Director Bill Pulte, who had previously criticized FICO’s price hikes and pushed for the use of VantageScore 4.0 to increase competition, called the announcement “a big win for the American people.” He encouraged the credit bureaus to “step up” and be more competitive.

Mortgage Industry Groups (Cautiously Positive)

Mortgage trade groups expressed cautious support:

  • The Mortgage Bankers Association (MBA) called the program a “step in the right direction” for a marketplace it views as “anticompetitive,” but said it “remains to be seen” if it will result in materially lower costs for consumers.
  • The Community Home Lenders of America (CHLA) called it a “good first step” but reiterated its call for even greater competition by having Fannie Mae and Freddie Mac establish their own credit scoring subsidiaries.