Lawmakers, MBA call out FICO for possible price hikes
A coalition of 34 Democratic senators and representatives submitted a letter to President Joe Biden this week urging him to oversee the election. US Department of Justice (DOJ) to investigate the pricing practices of Honest Isaac Corp. (FICO)’s credit reports.
The letter also encourages the president to lead the Federal Agency for Housing Financing (FHFA) to more aggressively investigate increases in rental housing prices; directing Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) to build on previous work against so-called “junk fees”; and to promote the development of more housing on federal property.
The letter was supplemented by the Community Home Lenders of America (CHLA) on its official communication channels. And the Association of Mortgage Bankers (MBA) intervened by explaining the impact higher credit reporting prices could have on consumers.
“The [DOJ] and CFPB must address anticompetitive behavior in the credit scoring market that is driving up prices for consumers,” the letter said. “The DOJ should investigate whether FICO and others are engaging in conduct that violates federal antitrust law. And the CFPB should explore possible solutions to exploding credit reporting costs, including a cap on the fees credit reporting agencies can charge and interoperability requirements that would allow consumers to change their credit scores without new fees.”
The FHFA has already “taken action to promote competition among credit bureaus and increase credit reporting accuracy by moving to a ‘bi-merge’ system that requires two instead of three credit reports from the national credit reporting agencies,” the letter said. added. “But the government can and should do more to lower credit reporting costs for everyday Americans.”
Signatories of the letter include Sen. Bernie Sanders (I-Vt.), who meets with Democrats in the Senate; Rep. Alexandria Ocasio-Cortez (D-N.Y.); Sen. Elizabeth Warren (D-Mass.); Rep. Katie Porter (D-California); and Senator Cory Booker (D-N.J.). No Republicans signed the letter.
MBA released a statement Friday saying that as a private company, FICO is free to set prices as they wish. But an important caveat was added.
“Over the past two years, MBA has expressed our frustration with the lack of transparency behind the continued price increases for tri-merge credit reports and other credit reporting products,” said Bob Broeksmit, president and CEO of MBA.
“While FICO and the credit reporting agencies are private companies with the freedom to set their prices as they see fit, raising prices again would harm consumers at a time of ongoing affordability challenges,” he continued. “Lenders must obtain FICO scores and three credit reports to make most loans to potential homebuyers and homeowners looking to refinance. The fact that we charge more every year for a product that has been around for a long time underlines the lack of competition in this area.”
Investors and analysts on Wall Street predict this week that FICO credit reporting fees could rise in 2025 due to lower interest rates, which could boost mortgage application activity. When reached by HousingWirethe company declined to comment.
But the letter shows that the debate surrounding the cost of credit scores is catching the attention of some lawmakers, who for months have seen housing issues become a prominent — but not dominant — factor in the 2024 election cycle. The majority in both chambers of Congress is up for grabs, as is the presidency.
