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Fair Isaac (FICO) faces a real policy risk: mortgage lenders working with Fannie Mae and Freddie Mac now have more approved credit-score models to use, which could eventually reduce demand for FICO scores or put pressure on their pricing. Analysts have responded with sharp target cuts, but those targets are opinions—not forecasts from Fair Isaac—and the policy change has not yet been shown to cause a quantified revenue loss. FICO’s fiscal third-quarter 2026 results were strong, making the issue a question of future adoption and pricing rather than evidence of an already reported downturn.
Why mortgage-score policy matters to Fair Isaac
Credit scores help mortgage-market participants assess borrower risk. Fannie Mae says scores are a foundation for risk-based pricing and investor disclosures, so the models accepted in the mortgage process can affect which companies supply scores and how much business each receives.
Fair Isaac identifies U.S. mortgage scoring as an important source of revenue for its Scores business. In its fiscal 2024 Form 10-K, the company warned that if Fannie Mae or Freddie Mac stopped using FICO Score, or reduced its use, the change could materially harm Fair Isaac’s revenue, results of operations and stock price. That is a disclosed risk, not evidence that the loss has happened. The filing also identifies a possible move from requiring three credit scores to requiring two—a bi-merge rather than tri-merge—as another way score demand could decline.
The company’s broader industry exposure should not be mistaken for mortgage-specific exposure: 92% of fiscal 2024 revenue came from sales of products and services to the banking industry, according to its Form 10-K. That figure covers banking broadly; it is not the share of revenue attributable to mortgages.
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What changed in mortgage-score availability
Fannie Mae’s April 2026 Selling Guide update
Fannie Mae’s first-quarter 2026 filing says its April 2026 Selling Guide update allowed lenders to use VantageScore 4.0 and FICO Score 10T alongside classic FICO. At the time of the filing, VantageScore 4.0 access was limited to a number of approved lenders. Wider availability depended on lenders’ operational readiness, so approval of an alternative model does not mean every lender—or every eligible loan—has switched to it.
FHA availability scheduled for 2027
FICO’s investor portal listed a September 11, 2026 announcement that FICO Score 10T would be available for FHA mortgage underwriting beginning January 1, 2027. That is a scheduled availability date; by itself, it does not establish how many lenders will adopt the score or how many loans will use it.
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These changes expand the models available in parts of the mortgage market. The business risk for FICO depends on what lenders actually use, how quickly they implement alternatives, whether score requirements change, and what lenders pay for each score. The available official disclosures do not quantify the future share of eligible loans expected to use VantageScore or the resulting dollar effect on Fair Isaac.
Why analysts cut their FICO targets
Investing.com reported on September 30, 2026 that Bank of America Securities downgraded FICO from Buy to Neutral and cut its price target from $1,400 to $700. The report attributed the move to FHFA policy changes affecting the treatment of VantageScore and classic FICO. A price target is an analyst’s estimate, not company guidance, a guaranteed future share price or a recommendation to buy or sell.
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| Firm | Target change reported | Reporting source and date |
|---|---|---|
| Bank of America Securities | $1,400 to $700; rating changed from Buy to Neutral | Investing.com, September 30, 2026 |
| Wells Fargo | $1,350 to $950 | PriceTargets.com, September 30, 2026 |
| Robert W. Baird | $1,549 to $1,070 | PriceTargets.com, October 2, 2026 |
| Barclays | $1,000 to $875 | PriceTargets.com, October 2, 2026 |
The cuts show that some analysts see policy-driven competition as a valuation concern. They do not establish that FICO’s mortgage revenue has already fallen, that all analysts agree, or that the targets will be reached.
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What FICO’s latest results say—and do not say
Fair Isaac reported fiscal Q3 2026 revenue of $674.2 million, up 26% year over year, and Scores revenue of $458.9 million, up 41%. B2B scoring revenue grew 49%; the company attributed that increase primarily to higher mortgage-origination score unit pricing. It also raised its fiscal 2026 guidance to $2.53 billion in revenue and $42.43 in non-GAAP earnings per share.
Those results show strong recent performance, not proof that future competition will be harmless. In particular, higher mortgage score pricing helped drive current B2B scoring growth even as the company has identified lower FICO use by the mortgage agencies as a potential material risk. The earnings figures describe the quarter that was reported; the policy risk concerns how model availability and lender decisions may change over time.
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How to assess the risk without treating targets as predictions
- Track actual use, not just approval. The Selling Guide change establishes that additional models are allowed, while limited lender access and operational readiness shape how quickly that permission can translate into use.
- Watch both score volume and price. FICO could face pressure if alternatives take share, if fewer scores are required per loan, or if competition reduces the price per score. The disclosures here do not quantify the likely change in any of those measures.
- Put mortgage exposure in context. Fair Isaac’s filing calls out mortgage scoring as significant to Scores revenue, but it does not provide a quantified forecast of how much revenue could migrate. The 92% banking figure is not a substitute for a mortgage revenue share.
- Separate operating results from valuation judgments. Quarterly growth and raised guidance are reported company performance; analyst targets are brokerage opinions about value. Neither alone resolves the longer-term effect of competition.
For now, official disclosures establish that model options have widened and that Fair Isaac sees reduced mortgage use of FICO as a material business risk. They do not establish the scale or timing of any migration. The path from policy change to financial impact depends on lender adoption, operational readiness, score requirements and pricing.
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