Shares of Experian (LSE:EXPN) tumbled 7.1% in London trading on Thursday after Fair Isaac, the U.S. analytics software company best known for its FICO scores, introduced a new mortgage-focused program that could reduce the role of traditional credit agencies.
Announced on Wednesday, the FICO® Mortgage Direct License Program is aimed at lessening lenders’ dependence on the three nationwide credit bureaus. The initiative allows tri-merge resellers to calculate and deliver FICO scores directly to clients, cutting out the middle step of relying on credit-reporting firms.
The launch poses a potential threat to the established business model of credit agencies such as Experian, as mortgage lenders may now have an alternative route to obtain borrower credit data without going through the traditional bureau system.
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