New direct-to-reseller license approach streamlines score access, saving lenders up to 50% on per score FICO fees
Global analytics software leader FICO (NYSE:FICO) today announced a major shift in the delivery of FICO® Scores to the mortgage industry. 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. This shift will drive price transparency and immediate cost savings to mortgage lenders, mortgage brokers, and other industry participants. Firms that favor working through the credit bureaus can continue to do so.
To increase choice and optionality for industry participants, FICO is introducing two alternate pricing models. FICO's new performance model is built on successful mortgage funding and reflects the FICO® Score's critical role in enabling mortgage liquidity and reducing lender costs. Under the new performance model, the royalty fee for the FICO Score will be $4.95 per score, which represents a 50% reduction in average per score fees into the tri-merge resellers, a reduction achieved by eliminating credit bureau mark-ups. A funded loan fee of $33 per borrower per score will apply when a FICO-scored loan is closed, recognizing the FICO Score's downstream utility for mortgage insurers, GSEs, investors, rating agencies, and other market participants. The funded loan fee replaces fees previously charged for re-issue of FICO Scores, enabling broad use by participants in the originating market.
Alternatively, lenders may opt to continue using the current per score only pricing model, which maintains a $10 per score fee into the tri-merge resellers, the average price previously charged by credit bureaus for the FICO® Score. This model is designed to represent no increase in per score fees for lenders.
The FICO direct license program empowers tri-merge resellers to optimize credit costs for both lenders and borrowers. By streamlining distribution, the direct license program enhances cost transparency and reduces the price of FICO® Scores to the mortgage industry.
"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. This change eliminates unnecessary mark-ups on the FICO Score and puts pricing model choice in the hands of those who use FICO Scores to drive mortgage decisions."
FICO will also offer both FICO mortgage score pricing models to the three nationwide credit bureaus on the same terms, though FICO does not control any pricing mark-ups the bureaus may impose in their channels.
FICO remains the only independent analytics provider and the only score with known, predictable performance through a complete economic cycle, including the stressed period of the Great Recession. The FICO® Score continues to be the cornerstone of the consumer lending ecosystem, used by 90% of top U.S. lenders to make consistent, fair, and informed credit decisions. FICO's new program aligns with calls from policymakers and industry leaders to modernize credit infrastructure and promote affordability, liquidity, and access in the $12 trillion U.S. mortgage industry.
FICO is currently working with mortgage tri-merge resellers to implement the new direct license program.
For more information on the FICO® Mortgage Direct License Program, click here: https://www.ficoscore.com/mortgagedirectlicense
About FICO
FICO (NYSE:FICO) powers decisions that help people and businesses around the world prosper. Founded in 1956, the company is a pioneer in the use of predictive analytics and data science to improve operational decisions. FICO holds more than 200 US and foreign patents on technologies that increase profitability, customer satisfaction and growth for businesses in financial services, insurance, telecommunications, health care, retail and many other industries. Using FICO solutions, businesses in more than 80 countries do everything from protecting 4 billion payment cards from fraud, to improving financial inclusion, to increasing supply chain resiliency. The FICO® Score, used by 90% of top U.S. lenders, is the standard measure of consumer credit risk in the US and has been made available in over 40 other countries, improving risk management, credit access and transparency.
Learn more at https://www.fico.com.
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