FICO stock is collapsing as mortgage industry shakeup stands to reshape how credit scores are used

Your credit score is one of the most important data points associated with your identity. A good score generally means lower interest rates on everything from credit cards to mortgages, while a bad score can subject you to higher rates. When it comes to mortgages, for decades lenders only relied on data from one company: Fair Isaac Corporation (NYSE: FICO), the owner of the eponymous FICO score. But newly announced changes mean lenders can now pull data from one of Fair Isaac Corporation’s main competitors, VantageScore Solutions, instead—and FICO stock has been sinking because of it. Here’s what you need to know. What’s happened? On Monday, the director of the Federal Housing Finance Agency (FHFA), William J. Pulte, announced that Fannie Mae and Freddie Mac will transition to a single mortgage-pricing grid that includes both FICO scores and credit scores from competitor VantageScore. “We are Simplifying Mortgage Pricing following feedback from lenders and consumers,” Pulte wrote. “Instead of two separate pricing grids, which makes zero sense, Fannie and Freddie are hereby moving to ONE PRICING GRID with VantageScore joining the existing FICO Classic pricing grid.” Historically, w…