The Federal Housing Finance Agency is changing how mortgage loans are priced by allowing the use of a second credit scoring model across Fannie Mae and Freddie Mac. Under a new unified pricing grid, borrowers using VantageScore can reach the top pricing band at a score of 780+, removing a previous 20 point disadvantage compared to those using Classic FICO. Shares of Fair Isaac fell 18% after the announcement, as lenders now have a cheaper alternative costing $0.99 per score compared to roughly $10 for a FICO score.

The stock of Fair Isaac is now more than 68% below its all-time high as the integration of VantageScore 4.0 tests its long-standing dominance in the U.S. mortgage system. While the company previously maintained a strong moat due to its scores being deeply embedded in lending processes, the availability of a low-cost alternative on the same pricing framework may weaken FICO's pricing power and pressure its market share.