Credit Stocks Face New Pressure As Washington Breaks FICO’s Grip On Mortgages
Credit scoring is a small part of the mortgage process, but it sits on a large profit pool. The industry’s core model depends on lenders buying scores and reports before loans reach Fannie Mae and Freddie Mac.
That setup came under fresh pressure this week after Federal Housing Finance Agency Director Bill Pulte moved to widen lender use of VantageScore.
Washington comes for the credit tollbooth
Fair Isaac, Equifax, TransUnion, and Experian all fell after Pulte said the credit firms had been “overcharging Americans.” Pulte also said Fannie Mae and Freddie Mac should approve all lenders using VantageScore.
The selloff reflects a pricing risk more than a simple market-share scare. If lenders can use fewer reports or alternate scores, the economics of mortgage credit checks could change.
Fannie Mae and Freddie Mac sit near the center of US mortgage finance. They buy loans from lenders and package them into securities, which gives their rules wide reach across the housing market.
Pulte oversees Fannie Mae and Freddie Mac’s government conservatorship through the Federal Housing Finance Agency. His direction gives lenders a broader path to use VantageScore, a rival to the FICO score.
"FICO has enjoyed a monopoly. No more."
Bill Pulte, Federal Housing Finance Agency.
VantageScore is not an outside disruptor in the usual sense. It was founded in 2006 and is jointly owned by Equifax, Experian, and TransUnion.
Why the bi-merge matters
The current mortgage process often uses a tri-merge report. That means lenders pull credit information from all three major bureaus before underwriting a borrower.
Pulte said the agency is seriously considering a bi-merge model. A bi-merge report uses two major credit bureaus instead of three, which reduces the number of reports sold.
That would hit the bureaus directly. It could also pressure Fair Isaac if lenders rely less on FICO scores in the mortgage approval workflow.
Pulte also said officials were studying the use of just one credit report. That would go further than bi-merge and could create more pricing pressure for the bureaus.
The policy direction is tied to housing affordability. Pulte has argued that lower credit-score and credit-report costs would help consumers trying to secure mortgages.
Competition may move slowly
The near-term risk is clear, but the switch may not happen all at once. TD Cowen analyst Jaret Seiberg wrote that lenders may keep buying both scores because there is “not enough known about VantageScore scoring to know how it compares to FICO.”
That matters because mortgage underwriting is conservative by design. Lenders have little incentive to create pricing mistakes if a second score helps confirm a borrower’s profile.
The Wall Street Journal said Pulte restarted a fight with the credit-score industry that began in 2025. It described the decision as a renewed push to empower VantageScore in mortgage lending, according to its markets coverage.
The sector now has a cluster of catalysts rather than a single headline. Investors are watching lender adoption, possible bi-merge rules, and whether Fannie Mae and Freddie Mac cap credit-report or score costs.
Fair Isaac remains the company most exposed to a direct challenge against FICO’s role. The bureaus face a different risk because fewer required reports could cut transaction volume.
The next test is whether lenders actually change what they buy. If FICO and VantageScore continue to be used together, the revenue hit could take time. But fewer required credit reports would put pressure on the bureaus much faster.