FICO Shares Sink 20% as Fannie and Freddie Move to a Unified Scoring Grid

Shares of Fair Isaac ($FICO) sank as much as 20% in premarket trading Tuesday after the Federal Housing Finance Agency said Fannie Mae and Freddie Mac will move to a single mortgage pricing grid that puts VantageScore on equal footing with Classic FICO.

Premarket as of Sep 29, before the open.

What happened

FHFA Director Bill Pulte announced the change Monday night on X, saying Fannie Mae and Freddie Mac will consolidate their separate pricing matrices into one unified grid that formally incorporates VantageScore 4.0 alongside the traditional Classic FICO score. Pulte gave no effective date and hasn't published the replacement grid, so operational details are still pending. The change applies to single-family purchase mortgages and purchase-money loans, with fee adjustments that vary by credit-score band (780 and above down to 639 and below) and loan-to-value ratio (30% and below up to above 95%).

Why this hits FICO's business

Fair Isaac, based in Bozeman, Montana, has for decades been the only credit score accepted in the pricing grid Fannie Mae and Freddie Mac use to set upfront fees on conventional mortgages, known as Loan-Level Price Adjustments. That effectively forced lenders to pay for a FICO score to originate a GSE-backed loan. A unified grid puts VantageScore on the same structural footing, giving lenders a way to price loans and secure agency approval without using FICO at all.

This is the second regulatory escalation from FHFA in less than a month. On September 4, the agency's approval of VantageScore 4.0 for all GSE-approved lenders sent FICO shares down 15% to 18% in a single session. Earlier this month, on September 9, FHFA also dropped the requirement that lenders get prior written approval before using VantageScore. VantageScore said it had already captured more than 9% of GSE mortgage securitizations by late August, in the months following a limited rollout that began May 1.