Fair Isaac, the company behind the FICO credit score, suffered its worst trading day on record, plunging 26.5% to $617.87 — a $223.02 drop that wiped out roughly $4.5 billion in market value, per Dow Jones Market Data.
The trigger was a structural break three decades in the making. FHFA Director Bill Pulte collapsed Fannie Mae and Freddie Mac's dual mortgage pricing grids into a single grid that puts VantageScore 4.0 on equal footing with FICO Classic — ending FICO's near-monopoly on mortgage credit scoring, a position it had held for roughly 30 years.
The industry moved fast. Rocket Mortgage became the first major lender to make VantageScore 4.0 its preferred score for eligible loans, a signal other lenders are widely expected to follow now that the government-sponsored enterprises price both scores identically.
Wall Street is repricing what FICO's mortgage franchise is worth. Jefferies warns the company's EBITDA could fall roughly 20% as competition compresses the pricing power FICO long enjoyed in mortgage underwriting.
The selloff extends a brutal year. The stock is now down about 62% year-to-date and sits more than 70% below its record highs near $2,000 — a collapse that has erased the better part of a decade of multiple expansion on what the market had treated as an unassailable moat.
What to watch next: whether additional large lenders follow Rocket's lead in the coming weeks, and how FICO responds — through pricing, product, or legal channels — to a competitive threat its own filings long described as remote.
Via @jd_durkin. Verified against Barron's and Reuters coverage.
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