Mortgage industry concerns on FICO score prices echoed by Congress

With credit score prices anticipated to rise, legislators join lending industry in speaking up

Mortgage industry concerns on FICO score prices echoed by Congress

With credit score prices anticipated to rise, legislators join lending industry in speaking up
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Mortgage industry concerns about the prices of FICO credit reports are getting a boost from Congress, with a group of lawmakers sending a letter to President Joe Biden to urge federal action.

The letter requests the Biden administration “continue bold executive action” to lower housing costs, including conditioning price-gouging protections on Fannie Mae and Freddie Mac multifamily loans, addressing junk fees and promoting housing development on federal property.

Also among the letter’s recommendations was an investigation into whether FICO — or, more formally, the Fair Isaac Corporation — is violating antitrust law. FICO, the letter said, enjoys a near-monopoly in the credit scoring market; consequently, the letter noted that since 2022, the cost to acquire a FICO credit score has jumped by a whopping 400%, with that cost often passed on to consumers. Recent market forecasts from investment analysts anticipate another price hike is in the cards next year, increasing the cost from $3.50 to at least $5.

The Consumer Financial Protection Bureau, the letter said, should explore potential solutions to that burgeoning expense, including a cap on fees that credit reporting agencies can charge and interoperability requirements to allow consumers to move their credit scores without inciting new fees.

“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. But the Administration can and should do more to lower credit reporting costs for everyday Americans,” the letter said.

Twenty-eight Democratic representatives, five Democratic senators and one independent senator signed the letter, which was spearheaded by Sen. Elizabeth Warren, D-Mass., and Rep. Jamaal Bowman, D-N.Y. Also endorsing the letter were the Tenant Union Federation, National Housing Law Project, National Low Income Housing Coalition, National Homelessness Law Center and Americans for Financial Reform.

The Community Home Lenders of America (CHLA) highlighted the letter in an email and called attention to its own letter to the Office of the Illinois Attorney asking for an antitrust investigation into FICO’s practices.

“CHLA believes that FICO’s 90% market-share, entrenched position in the Credit Scoring sector has resulted in anti-competitive practices that disproportionately affect marginalized communities, including low-income, minority, and other underserved populations,” said the CHLA’s letter, which was dated Oct. 9.

The Mortgage Bankers of America chimed in as well.

“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,” said Bob Broeksmit, president and CEO of the MBA. “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.”

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