FICOFair Isaac

A significant portion of our revenues in our Scores segment is attributable to the U.S. mortgage market, which includes, market. Historically, for mortgages eligible for purchase by The Federal National Mortgage Association (“Fannie Mae”) and The Federal Home Loan Mortgage Corporation (“Freddie Mac”), a requirement by those enterprises (“Enterprises”) required that U.S. lenders provide FICO® Scores for each mortgage delivered to them. However, their the continued use of the FICO Score for those mortgages is subject to ongoing validation and approval by those enterprises the Enterprises and the Federal Housing Finance Agency (“FHFA”). If other (“FHFA”), and is subject to competing credit score models are approved for use with mortgages delivered to Fannie Mae and Freddie Mac, or the FICO Score is not approved for continued use with those mortgages, it could have a material adverse effect on our revenues, results of operations and stock price. Other changes implemented by FHFA, Fannie Mae or Freddie Mac could also affect the demand for FICO Scores and thus could have similar adverse effects on our business, including, for models. For example, the change announced following an announcement by the FHFA Director in July 2025 permitting mortgage originators that the Enterprises would be adopting a so-called “lender choice” regime allowing lenders to choose the between a FICO Score or VantageScore, a competing credit score they submit with mortgages delivered model, the FHFA announced in April 2026 that the Enterprises would accept VantageScore from approved lenders and further announced in September 2026 that the Enterprises would accept VantageScore from all lenders. Also, in April 2026, the U.S. Department of Housing and Urban Development (“HUD”) announced that, beginning January 1, 2027, the Federal Housing Administration (“FHA”) would, in addition to Fannie Mae the Classic FICO® Score, permit the use of VantageScore and Freddie Mac or a potential future change permitting mortgage originators to underwrite loans using credit scores from fewer than three national consumer reporting agencies. The ability the latest version of our FICO Score, FICO® Score 10T, for FHA-insured mortgages. In the months following these announcements by the FHFA and HUD, our stock price has declined significantly, and it could continue to compete effectively decline due to these or other announcements, or due to any increased use, or perceived increased use, of VantageScore over FICO Scores in the U.S. mortgage market may be constrained by the pricing and other business practices of the consumer reporting agencies, which could have a material adverse effect on our revenues, results of operations and stock price. market.

On May 13, 2025, we amended our We have a credit agreement with a syndicate of banks, increasing our borrowing capacity under the banks that provides for a $1.0 billion unsecured revolving line of credit from $600 million to $1.0 billion and extending its maturity to that matures on May 13, 2030. Also on May 13, 2025, On June 5, 2026, we repaid in full and terminated amended our credit agreement to provide for the $300 million issuance of a $1.5 billion unsecured term loan (the “$300 Million Term Loan”) that was borrowed in full on June 5, 2026 and the $450 million unsecured matures on May 15, 2028. The credit agreement also provides for an option for us to request additional incremental term loan (the “$450 Million Term Loan”) outstanding under our credit agreement, utilizing proceeds from the issuance of the 2025 Senior Notes (as defined below). Borrowings under loans and/or incremental increases to the revolving line of credit from time to time, in each case subject to the terms and conditions of the credit agreement. Borrowings under the credit agreement can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions, and the repurchase of our common stock. Principal on the term loan is to be repaid in consecutive quarterly installments on the last business day of March, June, September, and December equal to (i) $75.0 million from September 30, 2026 through and including June 30, 2027 and (ii) $112.5 million thereafter. Interest rates on amounts borrowed under the revolving line of credit and term loan are based on (i) an adjusted base rate, which is the greatest of (a) the prime rate, (b) the Federal Funds rate plus 0.5%, and (c) the Daily Simple Secured Overnight Financing Rate (“SOFR”) plus 1%, plus, in each case, an applicable margin, (ii) the Daily Simple SOFR plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement), or (iii) term SOFR (without a credit spread adjustment) plus an applicable margin (or, if such rate is no longer available, a successor benchmark rate determined in accordance with the terms of the credit agreement). The applicable margin for base rate borrowings and for SOFR borrowings for the loans under the credit agreement is determined based on our consolidated leverage ratio. The applicable margin for loans under the revolving line of credit for base rate borrowings ranges from 0% to 0.75% 1% per annum and for SOFR borrowings ranges from 1% to 1.75% 2% per annum. The applicable margin for the term loan for base rate borrowings ranges from 0.5% to 1.25% per annum and for SOFR borrowings ranges from 1.5% to 2.25% per annum. In addition, we must pay certain credit facility agreement fees. The credit agreement contains certain restrictive covenants including a maximum consolidated leverage ratio of 4.5 to 1.0 through December 30, 2026, 4.0 to 1.0 during December 31, 2026 through December 30, 2027, and 3.5 to 1.0, 1.0 during December 31, 2027 and thereafter, subject to a step up to 4.0 to 1.0 following certain permitted acquisitions and subject to certain conditions, and contains other covenants typical of an unsecured credit facility.

In December 2023, the FASB Financial Accounting Standards Board (“FASB”) issued ASU Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as disaggregated information on income tax paid. The standard is effective for We adopted ASU 2023-09 in fiscal years beginning after December 15, 2024, which means that it will be effective for our fiscal years beginning October 1, 2025. Early 2026 on a prospective basis and the adoption is permitted. We are currently evaluating the impact that the updated standard will have on our resulted in expanded disclosures within our consolidated financial statements. as presented in Note 12.