Key insights
- The FHFA's approval of VantageScore for GSE mortgages poses a potential threat to FICO's market dominance. While switching costs and lender inertia may initially buffer FICO, increased competition could erode its pricing power and long-term market share. The investor's decision to double down or exit depends on their risk tolerance and belief in FICO's ability to adapt and maintain its competitive advantage.
Hello! I’m reaching from outside the US, i’ve been a long term bull on FICO, currently still sitting on gains albeit not much after the brutal selloff lately.
Based on the recent news where the FHFA has approved vantage score for GSE mortgage, how would you view this in terms of weakening FICO’s moat? Does this actually weaken fico’s pricing power, network effects and ultimately market share or is the complexity of switching models is so high that lenders will still stick to the classic FICO or FICO 10T out of habit?
TL;DR: Non-US investor holding a bag, it it time to double down or GTFO?