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BOZEMAN, Mont. - FICO (NYSE:FICO), a $36.4 billion market cap company with impressive gross profit margins of 81.75%, announced Wednesday a significant change to how its credit scores are delivered to the mortgage industry through its new FICO Mortgage Direct License Program, which allows tri-merge resellers to calculate and distribute FICO Scores directly to customers without going through credit bureaus. According to InvestingPro data, FICO has maintained strong financial health with robust profitability metrics.
The program introduces two pricing models. The new performance model charges $4.95 per score plus a $33 funded loan fee when a FICO-scored loan closes. This represents a 50% reduction in average per-score fees by eliminating credit bureau markups. Alternatively, lenders can choose a traditional model with a $10 per-score fee. The company’s strong market position is reflected in its 16.66% revenue growth over the last twelve months.
"Today marks a turning point in how credit scores are delivered and priced across the mortgage industry," said Will Lansing, Chief Executive Officer of FICO. "Direct licensing of the FICO Score brings transparency, competition, and cost-efficiency to the mortgage lending process."
FICO will offer both pricing models to the three nationwide credit bureaus on the same terms, though the company notes it cannot control any additional markups bureaus may impose.
The FICO Score remains the standard measure of consumer credit risk in the U.S., used by 90% of top U.S. lenders. The company is currently working with mortgage tri-merge resellers to implement the new direct license program.
According to the company’s press release statement, the program aims to increase price transparency and provide cost savings to mortgage lenders, brokers and other industry participants. Firms that prefer working through credit bureaus can continue to do so under existing arrangements. For detailed analysis of FICO’s financial performance and growth prospects, investors can access comprehensive research reports and additional insights through InvestingPro, which currently indicates the stock is trading above its Fair Value.
In other recent news, Fair Isaac announced the launch of its FICO Foundation Model for Financial Services, which introduces two specialized AI models aimed at enhancing accuracy and compliance for financial institutions. This development is part of Fair Isaac’s ongoing efforts to provide tailored analytics solutions in the financial sector. Additionally, Fair Isaac has entered a multi-year partnership with Chelsea Football Club to promote financial literacy in the United States, focusing on educating consumers about credit and credit scores.
Seaport Global Securities has initiated coverage on Fair Isaac with a Buy rating, emphasizing the company’s leadership in analytics and its dominant position with the FICO score. Meanwhile, Goldman Sachs reiterated its Buy rating, maintaining a price target of $1,915.00, citing Fair Isaac’s strategy in mortgage score pricing. However, BMO Capital lowered its price target for Fair Isaac to $1,650.00, though it continues to rate the stock as Outperform.
These recent developments highlight Fair Isaac’s strategic initiatives and the varied perspectives of analysts regarding its financial outlook.
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