Latest news with #FICOScore
Yahoo
6 days ago
- Business
- Yahoo
RBC, Jefferies Back Fair Isaac Corp. (FICO) After Stock Declines
RBC remains optimistic on Fair Isaac Corp. (NYSE:FICO) after the recent comments from Bill Pulte, Director of the Federal Housing Finance Agency (FHFA), led to selling pressure on the stock. In his note on May 20, an RBC analyst noted that while speaking at a Mortgage Bankers Association conference, the FHFA Director raised concerns about FICO's high costs and said they are actively addressing them. In addition, he called for a shift from tri-merge to bi-merge credit scores in the underwriting process, which, if implemented, will decrease FICO's scores volume. A portfolio of mortgage-backed securities with a magnifying glass, emphasizing the detail of credit risk management. The RBC analyst also highlighted that Mr. Pulte discussed the potential privatization of the government-sponsored enterprises (GSEs) Fannie Mae (FNMA) and Freddie Mac (FMCC). The analyst believes privatization would mean more competition for FICO's mortgage credit score business. However, his analysis suggests that GSE privatization will not materially impact FICO's business. He therefore maintained his Outperform rating with a price target of $2,170. On May 21, an analyst from Jefferies also expressed his bullish stance on FICO, believing the development to be temporary. He mentioned that while the scrutiny over mortgage costs is fair, FICO's credit-scoring fees are less than 1% of closing costs. He believes both these developments will have a manageable impact and that FICO's long-term growth prospects remain intact. He called the decline an opportunity to accumulate and reiterated his Buy rating with a $2,500 price target. Fair Isaac Corp. (NYSE:FICO) is an applied analytics company that provides software and the widely used FICO Score. It also offers consumers online services that enable them to access and understand their FICO Scores, the standard measure in the U.S. of consumer credit risk. While we acknowledge the potential of FICO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than FICO and that has 100x upside potential, check out our report about the cheapest AI stock. READ NEXT: and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None.
Yahoo
6 days ago
- Business
- Yahoo
VantageScore vs. FICO: How these two major credit scoring models compare
When you apply for a credit card or loan, creditors need a quick way to determine if you're trustworthy. How do they do it? Before the invention of credit scores, they had to get creative. Creditors relied on anything from letters of recommendation to financial background checks, and some just used their personal judgment. Thanks to FICO, things have changed. FICO gave creditors a way to quickly assess your borrowing eligibility with a three-digit credit score that reflects your history of paying back debt. Today, most creditors still use FICO Scores, but around 10% now use VantageScore credit scores instead. And the score they choose can affect your chances of being approved. This embedded content is not available in your region. Fair Issac and Company (FICO) is the company that developed the first credit score model back in 1989. When it comes to credit scores, FICO is the gold standard — their scores are used in an estimated 90% of lending decisions today. As far as how your credit scores are calculated, FICO considers several different categories of information in your credit reports and weighs each one differently. For example, your payment history makes up 35% of your FICO Score calculation, while your length of credit history only accounts for 15%. While some versions of the FICO Score range from 250 to 900 points, most range from 300 to 850. For the most widely used version of the FICO Score — the FICO Score 8 — the maximum number of points you can obtain is 850. Regardless of which version of the FICO Score you pull, you don't need to earn a perfect 850 score to have good credit. According to FICO, anything between 670 and 739 is a "good" credit score, while 740 to 799 is "very good." If FICO is the veteran of the credit score world, VantageScore is the up-and-coming rookie. VantageScore is a credit scoring company created by the three major credit bureaus (Equifax, Experian, and TransUnion) in 2006. Its goal is to produce scores that are the same for consumers across all three bureaus. Similar to FICO, VantageScore credit scores are pulled by creditors to help them determine if you qualify for credit cards and loans. They're also based on the information found in your credit reports, including your payment history, debt balances, and applications for new credit. VantageScore and FICO consider the same factors when calculating your credit scores, but they weigh them somewhat differently in each of their scoring models. As a result, there can be variation between your FICO and VantageScore credit scores, or even two scores from the same company. Here are some of the other main differences between the two: Popularity/market share: FICO is better established in the credit-scoring industry, and far more creditors rely on FICO to make their loan and credit card decisions. Generating new scores: If you have limited credit history, you may have VantageScore credit scores but not FICO Scores. That's because VantageScore can generate scores as soon as you open your first debt account. With FICO, it takes six months. Points awarded: In the past, it was normal to have VantageScore credit scores that were higher than your FICO Scores, but now it can go either way. The average FICO Score is currently 715, and the average VantageScore credit score is 702. There's a good chance you already have free access to at least one version of your FICO or VantageScore credit scores, since many banks, credit unions, and credit card issuers provide it as a perk for their customers. If not, you can sign up for Chase Credit Journey for a free VantageScore or CapitalOne CreditWise for a free FICO Score — even if you're not a Chase or CapitalOne customer. Additionally, you can see your free TransUnion VantageScore by signing up for My Money from Yahoo Finance. If you need more options, try one or both of these: Check the VantageScore website to see if your financial institution provides free VantageScore access. Sign up for FICO's Free Plan to get access to your FICO 8 Score. VantageScore credit scores are different from FICO Scores, but they're not more accurate. In terms of popularity with creditors, FICO Scores are used by creditors far more often. The majority of lenders use FICO credit scores when determining if you qualify for loans, including mortgages, car loans, and personal loans. There's no way to convert a VantageScore to a FICO Score, or vice versa, since each company has its own way of calculating credit scores.
Yahoo
21-05-2025
- Business
- Yahoo
Credit Score Stocks Slide as FHFA Head Questions Pricing
(Bloomberg) -- Fair Isaac Corp.'s shares are on track for their worst day since March 2020, falling alongside credit bureau stocks after the head of the Federal Housing Finance Agency questioned credit report pricing. Can Frank Gehry's 'Grand LA' Make Downtown Feel Like a Neighborhood? Chicago's O'Hare Airport Seeks Up to $4.3 Billion of Muni Debt NJ Transit Makes Deal With Engineers, Ending Three-Day Strike The FICO score provider dropped 14% on Wednesday, extending Tuesday's 8.1% slide. Shares of credit reporting agency TransUnion are down more than 7%, while Equifax Inc. has dropped 6.4%. FHFA Director Bill Pulte questioned credit score pricing in a series of posts on X this week. He said he was disappointed by FICO's cost increases and asked why some credit reports 'cost double' under President Joe Biden compared to what they did when Donald Trump was first in office. At a conference, Pulte also said the agency is reviewing a shift to a bi-merge credit score for underwriting, according to mortgage and real estate publication HousingWire. That approach would require reports from only two of the major credit bureaus instead of all three. 'We are encouraged by the FHFA leadership's commitment to financial safety and soundness, as well as preventing fraud,' said Satyan Merchant, TransUnion's senior vice president for auto and mortgage, in a statement. 'Data demonstrates that a tri-merge report best supports FHFA's priorities.' Concerning the data, a representative of TransUnion pointed to a company report that said eliminating one score would 'provide an incomplete picture' because a consumer's score can vary across bureaus. Fair Isaac and Equifax did not immediately provide Bloomberg News with a comment on the matter. 'There does not appear to be a specific new proposal, but prior pricing actions are clearly on the FHFA radar,' Baird analyst Jeffrey Meuler wrote to clients. The analyst noted that there are factors that may limit risks for FICO and the bureaus, including that it could be hard to establish the authority to limit business-to-business pricing. Jefferies' Surinder Thind told clients to 'buy the dip' in FICO's shares after Tuesday's decline. Even if the bi-merge model were adopted by all lenders, the analyst estimates a hit to Fair Isaac's adjusted earnings per share of 16% at most, with a 10% hit for Equifax and TransUnion. FICO said in November that its wholesale royalty for mortgage originations would rise to $4.95 per score, from $3.50. Jim Wehmann, the company's president of scores, wrote in a blog post announcing the change that the FICO Score had enhanced liquidity, expanded 'fair and objective' access to credit and supported homeownership. 'At $4.95 per score, the royalty collected by FICO for mortgage is entirely fair and reasonable, particularly considering the significant benefits it brings to the industry,' Wehmann wrote. Shares of Experian Plc, the other major credit bureau in the US, closed 1.1% lower in London. An Experian representative did not immediately respond to a request for comment. (Updates shares in second paragraph, adds TransUnion statement in fifth paragraph, adds chart.) Why Apple Still Hasn't Cracked AI Inside the First Stargate AI Data Center Anthropic Is Trying to Win the AI Race Without Losing Its Soul Microsoft's CEO on How AI Will Remake Every Company, Including His Cartoon Network's Last Gasp ©2025 Bloomberg L.P. 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
Fast Company
09-05-2025
- Business
- Fast Company
Built to last: One company's journey from delivering data insights to powering intelligent enterprises
Decades before Silicon Valley became synonymous with technological innovation, two visionaries laid the foundation for a company that would go on to become a cornerstone of modern analytics-based decision-making. In 1956, engineer Bill Fair and mathematician Earl Isaac founded Fair, Isaac and Company—what the world now knows as FICO. FICO was founded with the core belief that data and analytics can unlock better decision-making. At its inception, FICO was a consulting company focused on applying mathematics to real-world business challenges. It then evolved alongside the very concept of decision intelligence—first providing consulting, then building scoring models and ultimately delivering software that operationalizes analytics at enterprise scale. Like many companies that have also evolved and grown over time, there is much to be learned from the early (and present) days of FICO. President of Software Nikhil Behl offered some insight for budding enterprises, or companies that may be a bit stuck. FROM EARLY STARTUP TO NATIONAL ENTERPRISE FICO's first major growth opportunity came when financial institutions asked if the company could build an analytic model to improve consumer credit decision-making. That request planted the seed for what would become the now well-known FICO Score. But the journey didn't stop there. Those same institutions then asked for a way to embed analytics into their operational systems, sparking the development of FICO's software products. The company milestones then came in rapid succession. In 1972, FICO built the first fully automated loan application processing system for one of the largest banks in the U.S.. In 1986, FICO Triad—an account management system—was introduced and is still used widely today. In 1992, FICO Falcon Fraud Manager was launched, harnessing early AI techniques such as neural networks to detect fraud. What these milestones illustrate is not just technological evolution, but strategic foresight. FICO has continuously anticipated the needs of its clients and the broader market. This forward-looking philosophy culminated in the 2015 launch of a comprehensive decisioning platform that is known today as the FICO Platform—a cloud-first, enterprise-grade decisioning engine that empowers organizations to turn data into decisions in real time. 'FICO's core thesis is as true today as it was the day that the company was founded: How do you use data and analytics to make better decisions?' said Behl. TURNING CHALLENGES INTO GROWTH OPPORTUNITIES Of course, no transitions happen without challenges. There were conversations in the early 2010s when executives of leading banks expressed skepticism about moving to the cloud. Behl recalls a CIO of a top-20 global bank once telling FICO that they would 'never' adopt cloud solutions. Fast forward a decade, and the industry has not only embraced the cloud, but is thriving because of the speed, scalability, and insight it enables. THE TRANSFORMATION CONTINUES An even larger shift is now underway: the intelligence revolution. Society is at the dawn of a new era of transformation, and it's one driven by AI, machine learning, and decision intelligence. With more data being created than ever before, enterprises must unlock their latent value to stay competitive. Financial institutions in particular are leaning into platforms like FICO's not just to automate decisions, but to build intelligent enterprises. This means transforming every customer interaction into a personalized experience, every internal operation into a streamlined process, and every strategic initiative into a data-driven opportunity. Why is this important? 'Because customer expectations have changed,' emphasized Behl. 'Today, consumers want relevance, personalization, and continuity across every channel. Whether they're using an app, walking into a branch, or speaking to a representative, the experience should feel connected.' In other words, consumers today want companies they work with to know them —not just their names, but their behaviors, preferences, transaction histories, and needs The only way to enable this is through decision intelligence powered by data, analytics, and real-time execution. Businesses now collect vast amounts of data, but the competitive edge comes from analyzing that data to extract actionable insights and making real-time decisions based on those insights. FICO WORLD INSPIRES At FICO, the belief is that innovation is grounded in solving real customer problems. The company's annual conference, FICO World, exemplifies this partnership-driven mindset. FICO World is unique in the sense that it cultivates a space where over 1,000 clients share challenges, successes, and shape the future together. This collaborative innovation is what keeps FICO sharp, agile, and always aligned with the real world. 'All these years later, we are still customer obsessed,' Behl said. 'FICO is deeply engaged with our customers, solving real problems for them, and earning their trust on a real-time basis. We do not take the faith they put in us for granted.' What would the founders say? As FICO nears its 70th birthday, Behl reflected on how far the company has come. 'I believe our founders would be immensely proud—not just because the company they started nearly 70 years ago is still thriving, but because it is helping enterprises worldwide transform,' Behl said, adding that he believes the company's lasting value helps keep FICO relevant.
Yahoo
15-04-2025
- Business
- Yahoo
Sen. Josh Hawley calls on DOJ to investigate FICO
ST. LOUIS – 'I think the rates credit card companies are charging are outrageous,' U.S. Senator Josh Hawley said during an October 2024 debate. Even before the Senate debate hosted by FOX 2 in November, Sen. Hawley wanted more accountability in the financial services industry. Now in his second Senate term, he's again taking aim at Fair Isaac Corporation, or FICO. Earlier this month, Hawley sent a letter asking the Department of Justice to investigative FICO, alleging anticompetitive practices and repeated price hikes. 'There's only one company in America who basically does those FICO scores, and what they charge to consumers is outrageous, and it goes up every year, and most of the time, you don't know about it 'til you get billed,' Hawley said. Family sues youth league after teen's suicide following coach's alleged abuse Hawley told the DOJ, 'FICO enjoys a sweetheart deal from the federal government wherein its credit scores are required for loans originated with multiple government entities.' Hawley says FICO has abused its government-granted market power. 'Some bank runs your FICO score. You've got to pay for it. You go to buy a car; a car dealer runs your FICO score. You've got to pay for it. You get charged,' he said. 'The charges go up and up and up, and nobody can afford it, and nobody has given me given any option to opt out of it or have a competitor do it instead.' FOX 2 reached out to FICO to inquire about these allegations. The company responded with a statement: FICO continues to compete vigorously across consumer credit markets, and the FICO Score has long been freely chosen by lenders, investors, and other participants across consumer credit markets because it is trusted as the most predictive and reliable credit score, enabling lenders to fairly expand credit access to American consumers. The success of the FICO Score is not due to any government action in the mortgage market. In fact, the vast majority, approximately 99%, of FICO Scores used for decisioning across the consumer credit industry are used outside mortgage originations. And even within the mortgage market, lenders originate nearly thirty percent of all mortgages outside the Fannie Mae and Freddie Mac programs but still choose to use FICO Scores for those mortgages. The royalty collected by FICO remains a small percentage of the cost of the tri-merge credit report and score bundle (on average approximately 15% of the $80 to well over $100 tri-merge bundle cost), which is itself an exceedingly small share of overall mortgage closing costs. The FICO Score represents less than 2/10 of 1% of the approximately $6,000 in average closing costs for a mortgage—also compelling value given the central role the FICO Score plays in the origination of approximately $2 trillion in mortgages each year. 'This needs to stop. I've asked for investigation into their anti-competitive practices,' Hawley said. 'I just think this is a basic protection of American consumers and Missouri consumers. We are getting ripped off here by these people that it needs to stop.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
