The FICO score’s grip on the credit market is waning

For decades, almost every consumer credit decision revolved around a three-digit number: the FICO credit score. That is changing.

FICO has long dominated the consumer credit market, providing scores to some 200 million U.S. consumers that are used by a slew of lenders to assess credit card, auto loan and mortgage applicants. For borrowers, higher scores can mean bigger loans and lower interest rates.

But powerful forces unite to challenge his dominance.

Major lenders are moving away from FICO, people familiar with the matter say. Capital One Financial Corp. and Synchrony Financial don’t use the scores for most consumer loan decisions. They are becoming a minor factor in some underwriting decisions at JPMorgan Chase & Co. and Bank of America Corp.

A major financial regulator, meanwhile, is encouraging banks to focus on credit scores in an effort to expand access to affordable credit. And home finance giants Fannie Mae and Freddie Mac are considering allowing lenders to use different scores when rating mortgage applicants.