(Reuters) -Credit score modeling company Fair Isaac Corp ( FICO ), widely known as FICO, surged on Thursday after unveiling plans to sell its credit scores directly to mortgage lenders and resellers, cutting out credit bureaus that serve as intermediaries and rattling major bureau stocks.

Shares of Experian ( EXPGF ), Equifax ( EFX ) and TransUnion fell amid concerns that the move could erode their revenue.

Mortgage lenders that previously relied on these firms to obtain credit scores will be able to buy them directly, reducing dependence on the bureaus.

"This new distribution model will allow lenders to avoid paying the current about 100% markup the credit bureaus currently charge for the FICO scores," analysts at brokerage Raymond James said.  

The FICO score is used by nearly 90% of U.S. lenders to judge a borrower's creditworthiness. Higher scores signal lower risk of default.

The company said giving lenders and mortgage resellers direct access to FICO scores would boost competition and make pricing more transparent in the market.

The firm's latest move was lauded by Federal Housing Finance Agency Director Bill Pulte, who said in a post on social media platform X that the company has generated "creative solutions" to help the American consumer.

Pulte had earlier this year criticized the company over its pricing as he pushed to broaden the use of rival scoring models in mortgage lending.

Following his comment, FICO shares extended gains and were last up 23%. If the gains in the shares, which hit their highest since May 2025, hold, it would erase most of the losses for the year. 

Citigroup analysts said selling scores directly to lenders would cut out the margin that companies such as Experian ( EXPGF ) and Equifax ( EFX ) make on the FICO credit score. 

The new model could hit credit bureau earnings by an average of 10% to 15%, Jefferies analysts warned in a note. "For the bureaus to take price, they will now have to directly negotiate with the lenders, and compete with each other." 

Experian ( EXPGF ) shares closed down 4% in London. U.S.-listed Equifax ( EFX ) fell 8%, while TransUnion was last down 10%. 

Experian ( EXPGF ), Equifax ( EFX ) did not immediately respond to requests for comment, while TransUnion declined to comment.

INDUSTRY SHIFT 

FICO says its plan would bring immediate cost savings to lenders, brokers and other industry participants, while noting firms can continue to work through the credit bureaus.

"This change eliminates unnecessary markups on the FICO Score and puts pricing model choice in the hands of those who use FICO scores to drive mortgage decisions," CEO Will Lansing said. 

The change could also spark more competition in credit scoring.

The Mortgage Bankers Association welcomed the move and said FICO's new program is a step in the right direction but it is to be seen whether this will result in materially lower costs.

FICO's stock had taken a hit when Pulte allowed lenders to use VantageScore for Fannie Mae and Freddie Mac mortgages. VantageScore, founded in 2006, is a joint venture between credit bureaus Equifax ( EFX ), Experian ( EXPGF ) and TransUnion.

The agency's decision introduced direct competition for FICO in the mortgage market and raised doubts about its ability to continue raising prices. Analysts believe that the latest move will help allay some of those concerns.