Why Fair Isaac Stock Crashed Today

econews. Fair Isaac Corporation (FICO-16.25%) stock, home of the famous FICO score, tumbled 17.8% through 10:55 a.m. ET Friday. You can blame the Trump Administration for that.

And U.S. Federal Housing Finance Agency Director Bill Pulte in particular.

Image source: Getty Images.

Bill Pulte spooks the market

Pulte announced last night that he has directed the heads of Fannie Mae and Freddie Mac to accept mortgage loans for purchase from banks when those loans were issued in reliance on a Vantage credit score rather than the more traditional FICO score. Created in 2006 as an alternative to FICO, Vantage is a credit score created in cooperation by the three major credit bureaus, Equifax, Experian, and TransUnion.

It's failed to reach critical mass since then, but with a helping hand from the U.S. government, investors are wondering whether this time might be different -- and whether that could be bad news for FICO.

What it means for FICO

The Trump Administration has criticized Fair Isaac for contributing to the high cost of homeownership by charging excessive rates when banks pull FICO scores for mortgage applicants -- and has promised to lower the cost of home ownership. The push to introduce competition to FICO by encouraging the use of Vantage scores is part of this effort.

It might even work. Vantage's owners have advertised $0.99 prices for pulling a single credit score, whereas Fair Isaac charges $10 or more (often much more). While a $9 difference might not make much of a dent in the cost of homeownership, therefore, if price competition forces Fair Isaac to cut prices on its premier product, that could have a significant effect on FICO's profitability.