FICO predicted to hike costs for mortgage credit scores by up to 50%

Fair
Isaac
Corp.
(FICO)
will
once
again
raise
the
cost
of
credit
scores,
several
investment
firm
reports
predict.

Recent
notes
from
Jeffries
and
Wells
Fargo
forecast
that
credit
scores
could
see
close
to
a
50%
hike
in
2025.
The
current
cost
of
a
mortgage
credit
score
is
$3.25
but
could
reach
the
$5
range,
which
would
increase
the
cost
of
tri-merge
reports
issued
by
the
three
credit
bureaus.

Will
Lansing,
CEO
of
FICO,
in
the
company’s
third
quarter
earnings
call,
foreshadowed
that
prices
may
rise
in
the
foreseeable
future.

“What
we
charge
for
the
FICO
score
is
so
much
less
than
the
value
that
we
provide…,”
Lansing
said. “Our
thought
process
is
that
over
time,
we’re
going
to
close
some
of
that
gap”

FICO
declined
to
comment
Friday.

Last
year,
FICO
announced
a
significant
400%
price
hike
for
all
lenders,
which


sparked
backlash
from
the
mortgage
industry.
Trade
groups
and
industry
professionals
are
now
expressing
similar
concerns
regarding
how
potential
hikes
in
price
will
impact
consumers.

Jeffries,
an
investment
banking
and
capital
markets
firm,
wrote
that
investors
believe
the
cost
of
mortgage
credit
scores
will
be
raised
to
$5.25
in
2025.
This
would
equate
to
additional
revenue
for
the
company
of
over
$180
million. 

But
the
investment
firm
was
cautious
with
predictions,
noting
FICO “is
poised
to
benefit
from
volume
improvement
as
well
and
does
not
need
to
be
as
aggressive
as
it
has
in
the
past.”

A
report
by
Wells
Fargo,
published
in
early
October,
said
it
sees “a
long
runway
for
FICO
to
continue
increasing
its
prices
in
mortgage
and
other
verticals.”

Mortgage
trade
groups,
industry
stakeholders
and
members
of
Congress
expressed
worry
over
how
this
will
impact
housing
and
consumers.

Bob
Broeksmit,
CEO
of
the
Mortgage
Bankers
Association,
pointed
out
that
over
the
past
two
years
the
trade
group
has “voiced
frustration
with
the
lack
of
transparency
behind
the
ongoing
price
hikes
for
tri-merge
credit
reports
and
other
credit
reporting
products.”

“While
FICO
and
the
credit
reporting
agencies
are
private
companies
free
to
set
their
prices
as
they
wish,
raising
prices
once
again
would
hurt
consumers
at
a
time
of
continued
affordability
challenges,”
he
wrote
in
a
statement
Friday. “Lenders
are
required
to
obtain
FICO
scores
and
three
credit
reports
to
make
most
loans
to
prospective
homebuyers
and
homeowners
looking
to
refinance.”

“Charging
more
every
year
for
a
long-established
product
underlines
the
lack
of
competition
in
this
space,”
Broeksmit
added.

The
CHLA
dubbed
FICO
raising
costs “a
runaway
train.” 

“We’re
astounded,
but
unfortunately,
not
surprised
that
Fair
Isaac
Corp.
is
continuing
to
use
its
raw
monopoly
power
to
extract
more
money
from
the
pockets
of
first-time
homebuyers.
That’s
an
oversimplification,
but
that’s
what’s
going
on,”
said
Rob
Zimmer,
director
of
external
affairs
at
CHLA,
Friday.

The
topic
is
also
getting
attention
from
lawmakers.

Earlier
this
week,
a
group
of
34
Senate
and
House
members
called
on
the
Department
of
Justice
and
the
Consumer
Financial
Protection
Bureau
to
investigate
FICO’s
alleged
anti-competitive
behavior.

“The
DOJ
should
investigate
whether
FICO
and
others
are
engaging
in
behavior
that
violates
federal
antitrust
law,”
members
of
Congress
wrote
to
the
Biden
Administration. “And
the
CFPB
should
explore
potential
remedies
to
exploding
credit
reporting
costs,
including
a
cap
on
fees
that
credit
reporting
agencies
can
charge
and
interoperability
requirements
that
would
allow
consumers
to
move
their
credit
scores
without
new
fees.”