Latest news with #Bill Pulte
Yahoo
30-07-2025
- Business
- Yahoo
FICO raises full-year profit forecast amid robust demand for its products
(Reuters) -Credit scoring giant Fair Isaac Corporation, widely known as FICO, raised its forecast for full-year adjusted profit on Wednesday, reflecting robust demand for its products. The company now expects $718 million, or $29.15 per share, in adjusted profit for 2025, compared to its previous forecast of $712 million, or $28.58 per share. Shares of the Bozeman, Montana-based company rose 1.5% in extended trading. FICO also reported a jump in third-quarter profit, buoyed by strong performance in its scoring business. While the broader lending environment has remained muted in recent years, FICO has benefited from strong pricing power given its dominant position in mortgage scores. The company is best known for its FICO score, the standard measure of consumer credit risk used by banks, credit card issuers, mortgage lenders and auto loan providers. Scores revenue, which includes its business-to-business and business-to-consumer scoring solutions, jumped 34% to $324.3 million in the third quarter. Software revenue rose 3% to $212.1 million in the quarter. FICO's total revenue jumped 20% to $536.4 million from a year earlier. FICO's adjusted profit for the quarter totaled $210.6 million, or $8.57 per share, compared with $156.4 million, or $6.25 per share, a year earlier. Investor sentiment around the company has weakened this year after coming under fire from Federal Housing Finance Agency (FHFA) Director Bill Pulte over FICO pricing. Earlier this month, the FHFA also allowed the use of VantageScore for mortgages sold to Fannie Mae and Freddie Mac. The move introduces direct competition to FICO in the mortgage market and has raised concerns about its ability to continue raising its pricing. VantageScore, founded in 2006, is a joint venture between credit bureaus Equifax, Experian and TransUnion. FICO stock has plunged 23.3% so far this year, underperforming the benchmark S&P 500 index. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12-07-2025
- Business
- Yahoo
Fannie and Freddie may use new credit scores. Will it help you get a mortgage?
A regulator's decision to allow a big change to the way mortgages are underwritten is meeting a mixed reception from housing and finance professionals. 'Effective today, to increase competition to the Credit Score Ecosystem and consistent with President Trump's landslide mandate to lower costs, Fannie and Freddie will ALLOW lenders to use Vantage 4.0 Score,' Bill Pulte, the head of the Federal Housing Finance Agency (FHFA), tweeted on July 8. FHFA oversees Fannie Mae and Freddie Mac, the two giant government-sponsored enterprises that guarantee nearly half of all U.S. mortgage debt. Fannie and Freddie buy loans from banks and other financial institutions, so when they change their processes, it matters to lenders around the country, and the borrowers they serve. In this case, Pulte was referring to VantageScore, a company that offers credit scores – numerical representations of how likely a borrower is to repay a loan. Lenders who offer mortgages with the intention of selling them to Fannie or Freddie now have the option to use either VantageScore or to continue to use FICO, a competitor, to assess a borrower. 'FHFA's announcement to allow lenders to have a choice of credit score models to use when delivering loans to Fannie Mae and Freddie Mac could help to accomplish the goals of added competition in the credit score space and reduced consumer costs, if implemented correctly,' said the Mortgage Bankers Association, an industry group representing lenders, in a statement. 'We need more competition among credit bureaus and an end to monopolistic practices to lower prices and improve accuracy," Sharon Cornelissen, director of housing for the progressive Consumer Federation of America, told USA TODAY, in an email. "Director Pulte's action is a step in the right direction, and we hope he continues to work on reducing closing costs and broadening mortgage access for consumers.' But some consumer advocates believe the introduction of VantageScore into the mortgage space will actually decrease competition by consolidating industry share more firmly in the hands of TransUnion, Experian and Equifax, the three credit bureaus, which own the company. 'The big three credit bureaus are basically a functional monopoly,' said Chi Chi Wu, director of consumer reporting and data advocacy at the National Consumer Law Center. 'If you want a mortgage, you have to pull all three reports. You have no choice. They created VantageScore to try to drive FICO out of the market because they want the whole market. FICO is the only independent actor.' Ingmar Goldson, a Maryland-based consumer lawyer, echoed those beliefs. "Given that VantageScore is owned by the three major credit bureaus, I remain skeptical of any claims—whether from Fannie, Freddie, or the bureaus themselves—that this shift will truly benefit consumers in the long run," he told USA TODAY. Anthony Hutchinson, who heads public affairs for VantageScore, told USA TODAY that the company's model – the information it compiles on consumers to offer lenders information on their creditworthiness – is 'more holistic' than FICO's. Among other things, Hutchinson said, VantageScore's model is able to blend consumer information over a period of time. This 'trended' approach is more useful than just looking at a consumer at one moment in time, he argues, because it can show whether that person's financial health is improving or weakening. VantageScore also claims that there are 33 million Americans who are 'credit invisible' – that is, they have no credit score at all – and whom the company's more modern approaches to collecting data do better at scoring. But Wu says she doubts those numbers. In fact, the Consumer Financial Protection Bureau recently released research that suggests the number of Americans who are credit invisible is only about one-tenth that estimate, or roughly 2.7 million people. Wu also notes that FICO has also incorporated some of the more dynamic credit attributes VantageScore boasts about. In response to USA TODAY's request for comment, a FICO spokesperson emailed: 'FICO welcomes competition on a level playing field among credit score providers. We compete vigorously in every U.S. consumer credit market, and the FICO Score is freely chosen by lenders, investors, and other market participants because it is trusted as the most predictive and reliable credit score. FICO scores are the industry standard and preferred choice for evaluating creditworthiness in the mortgage process, regardless of whether the loan is conforming or non-conforming." Read next: Down payments are the biggest homeownership hurdle. Why is Washington making them scarcer? Opening up the credit scoring space to real competition – and easing the path to homeownership for more Americans – gets bipartisan support even in a polarized Washington. Pulte's decision had its origins in legislation introduced by Republican Senator Tim Scott (South Carolina) and Democratic Senator Mark Warner (Virginia) years ago, Hutchinson points out. The legislation, the Credit Score Competition Act, was signed into law in 2018 as part of the Economic Growth, Regulatory Relief, and Consumer Protection Act, but FHFA took several years to decide how to implement it. Senator Scott was one lawmaker urging quicker action on that front, in 2023. Wu believes the slower approach was for the best, given the number of stakeholders involved in making such a big transition. 'I think changing a well-thought out decision that was the result of a lot of process by an arbitrary tweet is bonkers,'' she said. "I have no idea if it complies with the 2018 law or the regulations, or if it's arbitrary and capricious.' Aside from concerns about the industry backdrop, VantageScore's presence might not even make a difference for consumers in terms of immediate savings. When asked about how much less one of their scores would cost compared to a FICO score, the company deflected the question to the credit and Experian did not immediately respond to a request for comment, and a TransUnion spokesperson referred USA TODAY to an industry group for more information. CFA's Cornelissen, despite her support for the step, acknowledges the savings will be minor: in the 'tens of dollars," she said. (This story has been updated to refresh the headlines.) This article originally appeared on USA TODAY: You may use a different credit score for a Fannie/Freddie mortgage Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
12-07-2025
- Business
- Yahoo
Why Fair Isaac Corporation Fell This Week
The FICO score inventor continues its war with the new administration's FHFA Director Bill Pulte. Pulte said this week that Fannie Mae and Freddie Mac will allow lenders to use a FICO alternative in scoring customers for mortgages. Fair Isaac has looked unbeatable in recent years, but it may be unable to raise prices as aggressively going forward. 10 stocks we like better than Fair Isaac › Shares of Fair Isaac (NYSE: FICO) fell this week, down 13.4% as of 12:10 p.m. ET on Thursday, according to data from S&P Global Market Intelligence. FICO has had somewhat of a monopoly on credit scoring, which has recently paved the way for large price increases, the most recent of which occurred in January. But this week, current Federal Housing Finance Agency (FHFA) Director Bill Pulte continued his mini-war against the company in the name of lowering costs for homeowners. This week, Pulte posted on X, formerly known as Twitter, that the current government-sponsored entities (GSEs) that buy mortgages, Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC), will allow lenders to use something called VantageScore 4.0, a new potential FICO competitor, without having to build new infrastructure. VantageScore is a new credit score developed by the three major credit bureaus in 2017. It incorporates alternative data and some less stringent traditional data requirements to better score people, say, in rural areas or with less credit history. Fair Isaac stock fell hard in the wake of Pulte's tweets, as the two big GSEs guarantee about half of all mortgages in the United States. Therefore, if a significant portion of mortgages were now scored using an alternative, FICO could potentially lose market share relative to its current near-100% share. Even after this week's decline, Fair Isaac still trades at a whopping 70 times earnings, which means investors aren't exactly expecting huge declines in market share or revenue. This may be for a couple of reasons. First, VantageScore appears to be an option for a smaller subset of borrowers with limited credit history. It's also unclear how much lenders will want to use it, except in cases where the current FICO score excludes a borrower. Second, the FHFA had already mandated Fannie Mae and Freddie Mac to use VantageScore back in late 2022, while giving the homebuying market a three-year grace period to implement it. So, this week's news isn't really new information, although Pulte appears to have sped up the acceptance process while also making VantageScore easier to use on existing technology. Moreover, perhaps the allowance of VantageScore will hold off the threat of federal agencies turning to "bi-merge" scoring -- allowing mortgages to be scored by only two credit bureaus. Currently, the standard for GSEs is a "tri-merge" system for both FICO and VantageScore, which requires all three credit bureaus to run a score. There had been talk of allowing bi-merge to lower costs in recent years, which would also reduce the volume of FICO scores. So, perhaps this new competition will ward off that threat. Still, it does appear that the large price hikes FICO has implemented over the past few years, and most recently in January, will cease for now. Even though FICO scores cost only $4.95 today, the new FHFA director has previously called FICO's price hikes and seems keen to show how the administration is lowering costs. Before you buy stock in Fair Isaac, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Fair Isaac wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $694,758!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $998,376!* Now, it's worth noting Stock Advisor's total average return is 1,058% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool recommends Fair Isaac. The Motley Fool has a disclosure policy. Why Fair Isaac Corporation Fell This Week was originally published by The Motley Fool
