Fair Isaac (FICO) faces emerging competition in credit scoring after the Federal Housing Finance Agency places VantageScore 4.0 model and the company's Classic FICO model on the same loan level price adjustment, or LLPA, pricing grid, BofA said in a Wednesday note.

While the pace of lender adoption remains uncertain, BofA believes the revised grid will add another risk to score volumes, pricing, and market share, on top of the already less leeway on score price increases owing to high and persist regulatory scrutiny, BofA said.

With VantageScore and Classic FICO getting the same LLPA treatment, lenders can use VantageScore to achieve more favorable loan pricing compared with the prior framework, thus, raising the incentive to test or adopt VS4.0, according to the note.

BofA lowered its rating on the company's stock to neutral from buy and adjusted its price target to $700 from $1,400.

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