Lenders can now simulate credit score changes before finalizing loan terms
FICO has launched the FICO® Score Mortgage Simulator, a tool designed to help mortgage professionals understand how changes in a borrower’s credit activity might affect their FICO Score.
Now available through Xactus, a mortgage fintech firm and credit data provider, the tool allows lenders to test different credit scenarios and better assess loan options for borrowers.
The simulator is the only FICO-authorized tool that uses the FICO Score algorithm to model credit changes. Mortgage lenders can access it through the Xactus360 platform, where they can input different credit events, such as paying off debts or opening new credit accounts, to see potential score fluctuations.
The simulator supports simulations across one, two, or all three major credit bureaus. It is compatible with FICO Score 2, FICO Score 4, and FICO Score 5, the classic FICO scores used in mortgage lending. By offering insight across multiple credit bureaus, lenders can make more informed decisions about loan approvals and pricing.
“The FICO Score Mortgage Simulator is the only tool available to mortgage professionals that leverages the trusted FICO Score algorithm,” Geoff Smith, vice president and general manager of consumer scores at FICO, said in a Press release. “Ultimately, this tool will allow lenders to better serve their customers as they pursue the dream of homeownership.”
Shelley Leonard, president of Xactus, called the simulator a significant advancement for mortgage professionals, adding that Xactus expects widespread adoption of the tool.
The launch of the simulator comes amid growing scrutiny over FICO’s mortgage-related credit score fees, which have significantly increased in recent years. In November 2024, FICO increased its wholesale royalty fee for mortgage-related credit scores from $3.50 to $4.95 per score – a 41% jump.
The price hike has frustrated mortgage lenders, who argued that these increasing costs add to the expense of originating a home loan.
FICO CEO William Lansing defended the move, saying price adjustments were overdue.
“It’s nothing compared to the overall cost of closing,” Lansing said. “It’s still small in the scheme of things, but for us, it was a big increase in price, in profit, revenue margin, all those things.”
FICO’s pricing changes have been ongoing for years. The company has raised its mortgage origination royalties four times, with fees rising sharply from 10 cents per score in 2018 to between 60 cents and $2.75 in 2022, before moving to a flat rate of $3.50 in late 2023 and $4.95 in late 2024.
Read more: FICO credit score price hike: What does it mean for the mortgage industry?
The price hikes have drawn backlash from regulators and industry groups. In 2024, Sen. Josh Hawley (R-Missouri) called for an investigation into FICO for anticompetitive practices, a stance echoed by a coalition of Democratic senators and the Community Home Lenders of America. Former Consumer Financial Protection Bureau (CFPB) director Rohit Chopra said the fee hikes were “price gouging.”
However, with Chopra no longer at the CFPB and the Trump administration focusing on reducing financial regulation, any immediate intervention seems unlikely. Meanwhile, credit bureaus have passed these increased fees to lenders, which ultimately trickles down to higher costs for homebuyers.
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