The 44% discount claim is not verified by the official company and agency materials available here. Those materials do show a meaningful change: approved lenders can choose VantageScore 4.0 as an alternative to Classic FICO for eligible loans sold to Fannie Mae and Freddie Mac. That creates a real competitive and pricing risk for Fair Isaac, but does not, by itself, establish that FICO stock is overvalued or undervalued by any particular amount.
What the “44% below fair value” claim does—and does not—show
A statement that a stock trades 44% below fair value is a valuation conclusion, not a fact established by the mortgage-score policy change. The official FHFA materials, FICO filings and earnings information, and Equifax pricing announcement discussed here do not provide a matching fair-value estimate or the calculation behind that percentage.
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Without the estimate’s publisher, reference share price, forecast period, cash-flow or earnings assumptions, and discount rate or valuation multiple, there is no sound way to verify the 44% figure. Treat it as an unsubstantiated thesis unless its originating analysis supplies those inputs. The available evidence can help investors assess the business risks and strengths that a valuation should account for, but it cannot produce a defensible fair-value price on its own.
What changed in mortgage credit scoring
Lenders now have a model choice for eligible loans
For decades, mortgages delivered to Fannie Mae and Freddie Mac required Classic FICO scores when available. FHFA’s interim policy now directs the Enterprises to let approved lenders choose between Classic FICO and VantageScore 4.0 for eligible loans. FHFA said VantageScore 4.0 availability expanded to all approved lenders on September 9, 2026.
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The choice is made loan by loan: under the current policy, a lender selects one approved model for a given loan rather than combining both models on that loan. The policy did not initially change credit-reporting requirements, so it should not be read as an immediate end to tri-merge reporting.
FICO 10T is not yet eligible for delivery
FHFA validated FICO 10T alongside VantageScore 4.0, but says FICO 10T is not currently eligible for loan delivery. Classic FICO remains approved, and FHFA has not announced a retirement date for it. Thus, the current change adds VantageScore 4.0 as an option; it does not mean Classic FICO has been withdrawn or that FICO 10T has replaced it.
Why FHFA says it is making the change
FHFA frames the newer models as a way to encourage competition and improve risk management. It also notes that newer models can use additional information, including rent-payment history. These are the agency’s policy rationales, not proof that a newer score will improve an outcome for every borrower or lender.
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How the competitive pressure could reach FICO’s business
FICO’s 2025 Form 10-K identifies VantageScore and the major consumer reporting agencies among outside suppliers of score models. It also warns that regulatory action affecting score prices or distribution could constrain mortgage-score revenue and profitability. With an approved alternative now available, the key commercial questions are how many lenders adopt it, how quickly loans shift between models, and what pricing follows.
That pressure is not the same as an immediate loss of all mortgage-score business. Classic FICO remains an approved option, and lenders’ choices and adoption rates will determine how much volume moves. Nor does model competition alone establish how much of FICO’s total profit depends on mortgage scoring; the company’s reported Scores segment includes more than a single policy-driven source of revenue.
What the announced score prices tell investors
The announced figures indicate pricing pressure, but they come from different programs and have different fee structures. Equifax’s October 7, 2025 announcement priced VantageScore 4.0 mortgage scores at $4.50 through the end of 2027. Equifax described that as more than 50% below FICO’s announced $10 pricing for 2026. That comparison is Equifax’s characterization, not an independently audited, industry-wide price comparison.
Separately, on FICO’s Q2 2026 earnings call, CEO William Lansing said the company changed pricing in its FICO mortgage direct-licensing program for FICO Score 10T from $4.95 per score plus a $33 funding fee to $0.99 per score plus a $65 funding fee. The lower per-score charge comes with a higher funding fee, so comparing only the per-score amounts would obscure the change in the fee structure. This direct-license pricing is not interchangeable with the figures in Equifax’s announcement.
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|---|---|---|
| Classic FICO | Approved for eligible Enterprise loans; a comparable price is not stated in the materials described here. | Still a permitted choice; no FHFA retirement date has been announced. |
| VantageScore 4.0 | Approved for eligible Enterprise loans. Equifax announced $4.50 pricing through the end of 2027 and compared it with FICO’s announced $10 2026 price. | The $4.50 term and comparison are from Equifax’s announcement; they do not establish a universal rate for every lender or transaction. |
| FICO 10T direct licensing | FICO’s Q2 2026 earnings call reported a change from $4.95 per score plus a $33 funding fee to $0.99 per score plus a $65 funding fee. | FHFA says FICO 10T is not currently eligible for delivery to the Enterprises, and the direct-license fee structure should not be treated as directly comparable to Equifax’s VantageScore announcement. |
FICO’s latest reported results complicate a simple decline story
Fair Isaac reported $475 million in Scores segment revenue for Q2 2026, up 60% year over year, on its Q2 earnings call. The company said recent Scores growth was largely driven by B2B scores. That is evidence of strong recent performance, not evidence that the same growth rate will continue or that mortgage-score competition will have no effect.
In its Form 10-Q for the quarter ended June 30, 2026, FICO reported a 90% year-to-date operating margin for the Scores segment, versus 88% in the prior-year period. The company attributed the increase primarily to higher B2B score pricing and mortgage origination score volume. High reported profitability matters to a valuation, but one period’s margin does not settle the appropriate future growth rate or valuation multiple.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What would make the valuation thesis stronger or weaker
To assess whether FICO shares are undervalued, investors need a model that separates mortgage-score exposure from the rest of the business and makes its assumptions visible. The policy change makes adoption and price pressure important inputs; FICO’s recent segment growth and margin provide relevant counterevidence to a thesis of imminent business collapse, but neither determines the correct share price.
- Mortgage revenue at risk: Estimate how much revenue and profit are exposed to model choice, lower pricing, and any shift in lender volume. Avoid treating every mortgage score as immediately lost to a competitor.
- Adoption pace: Account for lender uptake of VantageScore 4.0, continued Classic FICO use, and the fact that FICO 10T is not currently eligible for Enterprise delivery.
- Profitability and other growth: Test whether reported Scores margins and growth in other parts of FICO’s business can offset pressure on mortgage scores, rather than assuming either that margins persist unchanged or that they rapidly collapse.
- Valuation assumptions: State forecast years, revenue growth, operating margins, discount rate or valuation multiple, and the share-price reference point. Show how changing those assumptions changes the result.
A useful valuation case would apply a consistent set of assumptions across scenarios—for example, slower or faster lender adoption and different pricing outcomes—then compare revenue erosion, segment margins, other-business growth, and time to adoption on the same basis. The available official figures do not support specific scenario values or an independent 44% fair-value discount.
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Mortgage-score competition is no longer only a prospective risk: FHFA has approved lender choice between Classic FICO and VantageScore 4.0 for eligible loans, and announced pricing points to pressure on score costs. But the change is not an immediate removal of Classic FICO, and FICO’s recent Scores growth and profitability show why competition alone is not enough to establish a near-term collapse in results.
Whether FICO stock is undervalued depends on the assumptions used to translate those business developments into future cash flows and a share value. Until the source and inputs for the 44% estimate are disclosed, that precise discount should not be treated as a verified valuation result.
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