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Shares in Experian PLC and two US peers fell sharply on Thursday amid concerns about about a new threat to their businesses, as Fair Issac Corp said that it will launch a new direct-to-reseller approach to licensing its credit score algorithm. ‘With the launch of the FICO Mortgage Direct License Program, tri-merge resellers have the option to calculate and distribute FICO scores directly to their customers, eliminating reliance on the three nationwide credit bureaus,’ Fair Issac said in a statement late Wednesday. The Bozeman, Montana-based software firm said the shift will drive ‘price transparency and immediate cost savings’ to mortgage lenders, mortgage brokers, and other industry participants. ‘Firms that favour working through the credit bureaus can continue to do so,’ it added. ‘Today marks a turning point in how credit scores are delivered and priced across the mortgage industry,’ said Fair Issac Chief Executive Officer Will Lansing. Citi analysts explained that as ‘things stand today, credit bureaus (Experian, Equifax Inc, TransUnion) sell the data and the FICO score to a tri-merge (merging the three reports).’ The broker noted Fair Issac’s press release states that it is working to license its algorithm to the resellers, enabling them to pass these onto their customers, implying that this would cut out the margin that the likes of Experian and Equifax make on the FICO credit score itself. ‘Our initial reaction is that this is negative for Experian and Equifax,’ Citi said. Analysts at Jefferies estimates that Fair Issac’s new models could hurt credit bureau earnings by an average of 10% to 15%. ‘By introducing a licensing program for tri-merge resellers, Fair Issac is effectively taking away the ability of the credit bureaus to mark up the FICO score. For the bureaus to take price, they will now have to directly negotiate with the lenders, as well as compete with each other,’ Jefferies explained. Shares in Experian fell 6.9% to 3,420.00 pence each in London on Thursday morning, the biggest FTSE 100 index faller. In its financial year to March 31, 2025, Experian noted North America accounted for 67% of group revenue, contributing sales of $5.05 billion, out of the total $7.51 billion. In New York, Equifax was down 12% at $222.51 in pre-market trading, with Transunion also retreating 12% to $72.58. Going the opposite direction, Fair Issac was up 11% at $1,675.00. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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