Adds FICO statement and background in paragraphs 8-11

April 22 (Reuters) - Shares of Fair Isaac FICO.N, better known as FICO, slipped 12% on Wednesday after Freddie Mac and Fannie Mae said they will now accept mortgages assessed using rival credit scoring system, VantageScore 4.0.

The move is intended to lower costs for American homebuyers and boost competition in the mortgage credit scoring market dominated by FICO.

The mortgage housing giants will start with a limited roll-out to approved lenders.

Founded in 2006, FICO rival VantageScore is a credit score modeling and analytics company jointly owned by Equifax EFX.N, Experian EXPN.L and TransUnion TRU.N.

“By embracing additional predictive credit scoring models, we are taking a meaningful step toward expanding access to homeownership particularly for creditworthy borrowers who may have been overlooked under older systems,” U.S. Department of Housing and Urban Development Secretary Scott Turner said.

The Federal Housing Finance Agency's director, Bill Pulte, had in July proposed to allow Fannie Mae and Freddie Mac to use VantageScore 4.0.

Separately, efforts are also underway to roll out the use of FICO Score 10T - another approved credit score model, beginning with the publication of historical data this summer.

FICO launched its Score 10T model in 2020 to help lenders better predict and manage credit risk.

"FICO supports FHFA’s announcement that the long-anticipated historical data for FICO Score 10T will be released to the mortgage market to enable industry evaluation as part of the agency’s credit score modernization efforts," FICO said in a statement.

The Federal Housing Administration and Fannie Mae and Freddie Mac are implementing their first new credit score models for mortgages in decades.

In 2018, President Trump signed the Credit Score Competition Act into law, directing U.S. Federal Housing to enable Freddie Mac and Fannie Mae to approve more advanced credit score models for mortgage underwriting.