FICO
NOW
The man who bet against the housing bubble is back
Steve Eisman — yes, that Steve Eisman — says he’s short Fair Isaac, the company behind the FICO score. His gripe is simple: the company has spent years hiking prices, and mortgage lenders are over it.
FICO has long been the toll booth on U.S. consumer credit. Lenders need the score, FICO collects the royalty, and the pricing power looked basically immortal. Eisman’s point is that the moat may be cracking now that rivals like VantageScore are pushing harder and housing regulators have opened the door for wider use in mortgage underwriting.
Why this matters for your portfolio
This is less about one angry hedge fund manager and more about whether FICO’s golden goose is starting to feel the heat.
A few things are turning the screws:
- lenders are pushing back on the company’s price hikes
- VantageScore is cheaper and getting more traction
- Fannie Mae and Freddie Mac clearing the rival score for mortgage underwriting makes the market a little less cozy
The bigger vibe check
Eisman also threw ServiceNow into the conversation as a second example of software pricing power looking less bulletproof than it used to. Translation: the “charge whatever you want because the market has no choice” era may be losing some shine.
FICO is already trading like a stock that knows it’s in the crosshairs — under $1,000 and down more than 40% this year. Big picture: when a legendary short seller says your pricing moat is more like a puddle, investors tend to listen.