Overview

Fair Isaac Corp (FICO) shares dropped approximately 7% in after‑hours trading on Thursday following a Bloomberg report that the Federal Housing Finance Agency (FHFA) intends to direct Fannie Mae and Freddie Mac to obtain credit data from only two of the three major credit bureaus rather than the traditional three‑bureau “tri‑merge” report. The same news pushed TransUnion down about 6%, underscoring a broader market reaction affecting the credit‑reporting sector.

FHFA Proposed Requirement

According to a source cited by Bloomberg, FHFA Director Bill Pulte could announce the bi‑merge requirement as early as October 12 during a mortgage‑industry conference in Chicago. The proposed shift would allow lenders to rely on credit information from any two of the three dominant bureaus—Equifax Inc., Experian Plc, and TransUnion—potentially reducing the volume of data requests to each bureau.

Recent Market Context

The current development follows a turbulent September for FICO, during which the stock fell nearly 49% overall, including a 27% plunge on September 29 after FHFA announced that VantageScore, the competing scoring model jointly owned by the three bureaus, would be placed on the same mortgage‑pricing grid as the traditional FICO Classic score. That regulatory move opened the door for lenders to use VantageScore more widely in loans sold to Fannie Mae and Freddie Mac, eroding FICO’s historic dominance in mortgage scoring.

Industry Implications

The three credit‑reporting firms—Equifax, Experian, and TransUnion—jointly own VantageScore and have traditionally supplied a “tri‑merge” report that combines data from all three bureaus. FHFA Director Pulte has argued that the tri‑merge system adds unnecessary costs for homebuyers and has repeatedly urged both the bureaus and FICO to lower fees. On September 3, he publicly stated that the agency was “seriously considering bi‑merge,” referring to a system where lenders would use data from only two bureaus.

Potential Double Impact

The Bloomberg report suggests a double‑hit scenario: FICO could face intensified competition from VantageScore in mortgage scoring, while the credit bureaus may experience reduced demand for their traditional three‑bureau reports, potentially affecting their revenue streams.