Shares of Fair Isaac, Equifax and TransUnion tumbled after federal housing regulator Bill Pulte opened Fannie Mae and Freddie Mac mortgages to broader use of VantageScore and signaled that additional changes could reduce the number and cost of credit reports required from homebuyers.
By yourNEWS Media Newsroom
Shares of the company behind FICO scores suffered their sharpest intraday selloff in years Friday after the Trump administration expanded competition in mortgage credit scoring and threatened additional changes aimed at reducing what federal housing officials say are excessive costs imposed on homebuyers.
Fair Isaac Corp. fell as much as 21% during Friday trading, while Equifax and TransUnion each dropped as much as 11%, after Federal Housing Finance Agency Director Bill Pulte announced that Fannie Mae and Freddie Mac would immediately allow all lenders to use competing VantageScore credit scores.
The selloff accelerated after Pulte also raised the prospect of changing the credit-reporting system used for conforming mortgages.
“Equifax, Experian, and TransUnion have been overcharging Americans for far too long,” Pulte wrote Thursday.
“This will end soon. We are seriously considering bi-merge, and stronger solutions (SAFER and SOUNDER). We will not allow companies to take advantage of American consumers. No more.”
The potential shift could have consequences extending beyond Fair Isaac, whose FICO system has long dominated mortgage underwriting.
A bi-merge system generally relies on reports from two national credit bureaus rather than requiring information from all three, potentially reducing the number of credit inquiries purchased during the mortgage process.
RBC Capital Markets analyst Ashish Sabadra told clients that broad adoption of such a system could affect as much as one-third of mortgage inquiries.
“Tweet from FHFA Director Bill Pulte suggests the agency is seriously considering permitting bi-merge credit reports for conforming loans,” Sabadra wrote.
“If fully adopted across the mortgage market, this shift could negatively impact up to one-third of mortgage inquiries. Beyond volume loss, the move would also introduce greater competition in mortgage credit reporting, a dynamic we will monitor closely for signs of pricing pressure.”
The warning came alongside a more immediate policy change.
Fannie Mae and Freddie Mac will now approve all lenders to use VantageScore, according to a report on the FHFA directive, substantially expanding a program that initially involved 50 lenders.
VantageScore competes directly with FICO in evaluating borrowers’ creditworthiness.
The broader availability represents a challenge to a mortgage market in which FICO scores have historically held a dominant position.
According to Sabadra, VantageScore already has begun gaining traction at some of the country’s largest mortgage lenders.
VantageScore 4.0 accounted for approximately 25% of credit scores at United Wholesale Mortgage and roughly 34% at Rocket Mortgage through Aug. 25.
Yet the original program remained comparatively limited in actual loan production.
Although 50 lenders participated in the rollout, Fannie Mae data indicated that only four mortgage lenders were actively issuing loans using VantageScore, Sabadra wrote.
Opening the system to every approved lender could significantly broaden adoption.
“VantageScore adoption has already gained meaningful traction, with VS4 market share reaching approximately 25% at UWM and ~34% at Rocket through August 25th,” Sabadra wrote.
“However, while 50 lenders participated in the pilot program, Fannie Mae data indicates that only four mortgage lenders were actively issuing VantageScore loans. Pulte’s directive to open adoption to all lenders would therefore represent a significant broadening of the program.”
The market reaction reflected concern that the reforms could attack two revenue streams simultaneously.
For Fair Isaac, greater adoption of VantageScore threatens competition with the company’s core FICO scoring product.
For Equifax, TransUnion and Experian, a move from the existing mortgage credit-reporting structure toward bi-merge reports could reduce the number of bureau reports purchased for individual mortgage applications.
The exposure differs substantially among the three major credit bureaus.
Equifax has the greatest mortgage exposure.
Mortgage-related operations accounted for approximately 21% of Equifax’s total 2025 revenue, according to RBC. Mortgage credit reports and mortgage solutions represented roughly 11% of total company revenue and approximately 32% of revenue in its U.S. Information Solutions division.
TransUnion derived approximately 13% of its total revenue from mortgages, representing about 35% of U.S. Financial Services revenue.
Experian had the smallest exposure, with mortgages accounting for approximately 4% of total revenue.
“EFX carries the greatest mortgage exposure given its mortgage solutions and income and employment verification businesses, though these same assets also present meaningful bundling opportunities,” Sabadra wrote.
He said third-party resellers control more than 75% of the remaining market and could favor TransUnion and Experian depending on how a new system is structured.
“EXPN has the least mortgage exposure among the three bureaus and would likely face the smallest revenue headwind from this potential regulatory change,” he wrote.
The impact on Fair Isaac could be more direct.
FICO scores have been deeply embedded in the mortgage industry for decades, giving Fair Isaac an unusually strong position whenever lenders originate mortgages intended for sale to Fannie Mae or Freddie Mac.
Greater acceptance of a competing scoring model gives lenders another option and potentially creates greater pressure on pricing.
That prospect helped send Fair Isaac shares down as much as 21% Friday, which would represent the company’s largest intraday decline since March 2020 if the losses were sustained through the close.
Equifax and TransUnion each fell as much as 11%.
The administration has framed the changes as an attempt to reduce costs and increase competition rather than eliminate credit scoring.
Pulte’s immediate directive concerns VantageScore eligibility, while the possible bi-merge change remains under consideration.
RBC summarized the distinction in its client note.
“FHFA Director Bill Pulte announced last night that effective immediately, Fannie Mae and Freddie Mac have been instructed to approve all lenders to use VantageScore as an eligible credit scoring system,” Sabadra wrote.
“The directive follows a successful initial rollout in which 50 lenders delivered loans using VantageScore under the program.”
“In a separate post, Pulte stated that EFX, TRU, and EXPN are overcharging American consumers and that he is seriously considering a bi-merge credit pull requirement for conforming loans, as well as structural reforms.”
The developments could ultimately affect some of the transaction costs associated with obtaining a mortgage.
Credit scores and reports are only one component of the overall expense of buying and financing a home, and the announced changes do not by themselves reduce mortgage interest rates or home prices.
The administration’s argument is instead that greater competition among scoring companies and fewer mandatory credit-report purchases could reduce fees within the lending process.
The extent of any savings will depend on how lenders respond, how widely VantageScore is adopted and whether FHFA ultimately proceeds with the additional reporting reforms Pulte described.
The issue also arrives as housing affordability remains a major concern ahead of the November midterm elections.
TD Cowen analyst Jaret Seiberg told clients that Pulte’s effort to reduce mortgage-related expenses could support the administration’s affordability message before voters head to the polls.
For investors, however, Friday’s reaction centered on the potential loss of pricing power and market share among companies that have benefited from the existing mortgage-credit infrastructure.
VantageScore’s expansion introduces a direct competitor to FICO across a much larger pool of lenders.
A future bi-merge requirement could separately reduce demand for reports from the three nationwide credit bureaus.
Neither change eliminates FICO or the credit bureaus from mortgage lending, and the bi-merge proposal has not yet been adopted.
But Wall Street treated Pulte’s comments as evidence that the federal government is prepared to make more extensive changes to a system that has generated significant revenue for Fair Isaac, Equifax, TransUnion and Experian.
The immediate result was a sharp repricing of those businesses Friday as investors assessed what a more competitive mortgage credit market could mean for future revenue.
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