Lawmakers, MBA call out FICO for potential price hikes

A coalition of 34 Democratic senators and representatives submitted a letter this week to President Joe Biden, urging him to direct the U.S. Department of Justice (DOJ) to investigate the pricing practices of Fair Isaac Corp. (FICO)’s credit reports.

The letter also encourages the president to direct the Federal Housing Finance Agency (FHFA) to more aggressively investigate hikes on prices for rental housing; to direct the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) to build upon previously established work against so-called “junk fees”; and to promote the development of more housing on federal property.

The letter was amplified by the Community Home Lenders of America (CHLA) on its official communications channels. And the Mortgage Bankers Association (MBA) chimed in by explaining the impact that higher credit reporting prices could have on consumers.

“The [DOJ] and CFPB should address anti-competitive behavior in the credit scoring market that jacks up prices for consumers,” the letter reads. “The DOJ should investigate whether FICO and others are engaging in behavior that violates federal antitrust law. 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.”

The FHFA has already “taken action to promote competition among the credit bureaus and increase accuracy in credit scoring by transitioning to a ‘bi-merge’ system that requires two, instead of three, credit reports from the nationwide credit reporting agencies,” the letter added. “But the administration can and should do more to lower credit reporting costs for everyday Americans.”

Some of the letter’s signatories include Sen. Bernie Sanders (I-Vt.) who caucuses in the upper chamber with Democrats; Rep. Alexandria Ocasio-Cortez (D-N.Y.); Sen. Elizabeth Warren (D-Mass.); Rep. Katie Porter (D-Calif.); and Sen. Cory Booker (D-N.J.). There are no Republican who signed the letter.

MBA released a statement on Friday saying that as a private company, FICO is free to set prices however they wish. But it added an important caveat.

“Over the past two years, MBA has voiced our frustration with the lack of transparency behind the ongoing price hikes for tri-merge credit reports and other credit reporting products,” said Bob Broeksmit, MBA’s president and CEO.

“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 continued. “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.”

Wall Street investors and analysts this week forecast that FICO credit reporting costs could rise in 2025 on the backs of lower interest rates, which could spur mortgage application activity. When reached by HousingWire, the company declined to comment.

But the letter shows that the discussion around the cost of credit scores is grabbing the attention of some lawmakers, who for months have seen housing issues become a prominent — though not dominant — fixture of the 2024 election cycle. Majorities in both congressional chambers are up for grabs, as is the presidency.