Major Changes to the FICO Program

On October 1, 2025, FICO announced their Mortgage Direct License Program, which marks a large shift in how credit scores are distributed and calculated for everyday mortgage lenders and borrowers.

Tri-merge resellers, the agencies who provide mortgage lenders with credit scores, typically rely on credit bureaus to calculate scores. These bureaus (TransUnion, Experian, and Equifax) analyze their consumer databases using FICO’s scoring algorithm, then sell the scores they generate to resellers—often with upcharges. But that’s about to change.

Moving forward, FICO is cutting out the middleman. Their new licensure program will allow tri-merge resellers to generate the credit scores themselves, as opposed to relying on credit bureaus to do so. In the past, only credit bureaus had the license to use FICO’s algorithm; now, resellers can access the algorithm on their own.

What About Credit Bureaus?

This doesn’t mean that credit bureaus will become obsolete. Resellers will still rely on bureaus for their databases of consumer information—things payment histories and debts—for the creation of scores. But since tri-merge resellers will now be able to calculate credit scores on their own, they’ll only need bureaus for the data, not the score calculation itself.

Credit bureaus use FICO’s patented scoring algorithm, along with the bureaus’ databases of credit information, to generate credit scores. Then, they sell these scores to tri-merge resellers, who sell them to mortgage lenders. Mortgage lenders then use credit scores to gain insight into the trustworthiness of borrowers to help them to make informed lending decisions. These processes affect everyday American consumers who are looking to borrow funds for mortgages.

Why Does This Matter?

90% of the top U.S. lenders use FICO scores as a baseline for credit trustworthiness. When a major change like this occurs, it can trickle down and impact millions of borrowers. It’s likely that this move will help mortgage lenders and brokers save money, which may in turn be reflected in consumer borrowing fees. However, only time will tell who and what this change will affect.

FICO plans to charge resellers a royalty fee of $4.95 per score, which they say a 50% price decrease from past fees. By cutting out the necessity for credit bureaus, they’ll ideally cut out the markups that make credit checks so high for borrowers. Plus, regulators recently approved the use of VantageScore, a credit score calculated by TransUnion, Experian, and Equifax themselves, using their own algorithm. This means that tri-merge resellers will also have more than one option for credit score algorithms. Some cite this as FICO’s reasoning for their new program.

What’s Changing for Homebuyers?

Ideally, this change will create more competition and break up the credit score monopoly, which in turn will result in lower fees and overall costs for consumers. But some critics point to FICO’s other new fees: upon the successful closing of a loan, homebuyers will be charged $33 per score (meaning $99 for all three bureaus) thrown into their closing costs.

Currently, lenders charge borrowers around $30 per credit report when they apply for mortgages. These fees may decrease slightly with the cut of credit bureau upcharges, but it’s difficult to say whether homebuyers will feel a noticeable change or not. For now, the licensure program only applies to mortgages, so consumers with car loans and the like won’t experience any differences.

Will the Change Impact Innago Users?

The short answer: likely not.

Innago uses Experian to pull credit reports for tenant screening. Understanding the financial history of a prospective tenant is extremely important, but for now, this change only applies to mortgages. Meaning you as a landlord won’t have to worry about any price changes related to your tenant screening reports.

However, if it becomes the industry standard to utilize other scoring algorithms such as VantageScore, prices may fluctuate as things settle. If any changes to occur in the future, rest assured that we will continue to provide the most effective and trustworthy screening tools with full price transparency.

Conclusion

FICO’s Mortgage Direct License Program is what many have called “a step in the right direction” for lowering consumer borrowing costs. Credit bureaus will no longer have exclusive access to FICO’s scoring algorithm, which will allow for price transparency and competition in the once-dominated market of credit scores. Changes such as this can and will hopefully lead to lower fees associated with mortgage application credit pulls and more.

FAQs

What is the FICO Mortgage Direct License Program?

The FICO Mortgage Direct License Program is a new initiative that allows tri-merge resellers to directly access FICO’s scoring algorithm, enabling them to generate credit scores themselves without relying on credit bureaus.

How does the FICO change affect credit bureaus like TransUnion, Experian, and Equifax?

While credit bureaus will still be needed for their consumer data, they will no longer have exclusive rights to calculate credit scores using FICO’s algorithm. This shift reduces their control over credit score distribution.

Why is the new FICO program important for mortgage lenders?

The program is significant for mortgage lenders because it reduces costs associated with credit score calculation, potentially lowering borrowing fees for consumers. With direct access to the FICO algorithm, lenders can benefit from increased price transparency and competition.

How might the FICO Mortgage Direct License Program impact homebuyers?

Homebuyers might see lower costs for credit screening as a result of reduced markups. However, new fees from FICO at closing ($33 per score) may affect overall expenses.