Fair Isaac Corp., the company behind FICO credit scores, is eliminating approximately 15% of positions across its business, citing a simpler operating structure and the integration of AI into product development.
The reductions come during a shift in credit scoring that gives lenders more choices, and puts the prices and qualifying results of competing models under greater scrutiny.
FICO disclosed the cuts in an Oct. 6 securities filing, saying management committed to the plan Oct. 1, and began notifying affected employees the week of Oct. 5. The company expects approximately $27 million in pretax severance and related charges in fiscal Q4 2026, with the plan substantially completed by the end of fiscal Q3 2027.
FICO did not provide an exact headcount or identify affected departments and locations. Applying the reduction to its reported workforce of 3,811 at Sept. 30, 2025, would amount to roughly 570 positions.
The cuts follow a separate round of layoffs in 2025, when FICO eliminated 226 positions and recorded $10.9 million in employee separation costs during the quarter ended Sept. 30.
FICO identifies AI-driven product development, fewer organizational layers, and optimization of processes and tools among the objectives of its workforce reduction. The cuts also come amid growing competition from VantageScore, though the company has not attributed the reductions to that competitive pressure.
There were indications of restructuring before September’s latest credit-score policy changes. On FICO’s July 29 earnings call, Chief Financial Officer Steven Weber said the company anticipated some one-time restructuring charges in fiscal Q4. He did not identify a workforce reduction of this size at that time.
Higher Prices Powered Scoring Growth
The cuts follow strong reported financial results.
For the quarter ended June 30, FICO’s revenue increased 26% to $674.2 million, while net income rose to $237.2 million from $181.8 million a year earlier. Scores revenue increased 41% to $458.9 million. The company attributed much of its business-to-business scoring growth to a higher unit price for mortgage origination scores.
The earnings call sharpened that distinction: origination-score revenue increased 97% year over year, while volume grew in the low single digits. Origination revenue accounted for 62% of total Scores revenue.
Much of that growth came from earning more per transaction. Now, major lenders are giving VantageScore a larger role, creating an alternative to the model that helped FICO command those prices.
The cuts arrive at an uncomfortable moment for a company whose scoring business is growing rapidly — but increasingly faces competition for that business.
Score Choice Moves Into The Loan File
FHFA expanded VantageScore 4.0 availability to all approved Fannie Mae and Freddie Mac lenders on Sept. 9, removing the requirement for prior written approval on eligible loans. On Sept. 30, the enterprises published adjustments aligning upfront fees across VantageScore 4.0 and Classic FICO.
Those adjustments concern GSE loan pricing, separate from the charges lenders pay for credit reports and scores. Classic FICO remains eligible for loan delivery. FICO Score 10T is planned for future use but is not currently eligible for GSE delivery.
Major lenders are now incorporating that choice into their origination processes.
UWM announced Oct. 6 that it obtains FICO and VantageScore 4.0 on all credit pulls and automatically selects the strongest qualifying score. The lender said the approach can improve borrower pricing and simplify the process for brokers, while crediting competition between models with driving costs down.
Pennymac has also rolled out VantageScore 4.0 across its consumer-direct, broker. and correspondent businesses, extending access through another major lending platform.
Continued use of FICO does not mean FICO will determine the qualifying result on every loan. Under UWM’s approach, both models remain in the credit pull, while the lender determines which produces the stronger qualifying outcome.
That also means VantageScore adoption should not automatically be read as a lost FICO transaction. Lenders can obtain both scores even when they ultimately use VantageScore for underwriting and pricing.
Restructuring Alongside Share Repurchases
FICO has also continued returning capital to shareholders. In June, its board authorized a new repurchase program of up to $2 billion, replacing the remaining availability under its previous program. The announcement included a $1.5 billion accelerated share repurchase funded by a term loan.
The buybacks and strong reported earnings provide a broader picture of the company’s finances, but neither establishes the reason for the workforce reductions. FICO has not disclosed projected annual savings or how the cuts are divided between its Scores and Software businesses.
For brokers and LOs, lender policies on score selection are becoming another factor in where to place a loan. Access to competing models can give originators another path to qualification or better pricing for a borrower, and another reason to compare lenders before submitting a file.
