FICO plummets 26% after losing its exclusivity in US mortgages
WHAT HAPPENED
The FHFA removed FICO's advantage in US mortgages: now banks can use either its score or VantageScore without paying a penalty. FICO's shares fell by as much as 27%, near $590.
WHY IT MATTERS
For over 30 years, FICO was the almost sole standard for approving mortgages. With the opening of competition, banks could save about $1 billion in a year and some buyers around $1,600, although the effect will vary by case.
AND FOR YOUR PORTFOLIO
For Vectorial's portfolio, the blow is direct: FICO was already down 48% since purchase and now faces competition in the business that differentiated it the most. For homebuyers, the change may reduce costs, but it does not guarantee a cheaper mortgage for everyone.
💬 TELL IT LIKE THIS
“FICO did not lose because its scores stopped working: it lost the advantage of being the only accepted option in US mortgages.”