A community lenders group is pressing for more competition in GSE credit scoring and reporting, and a new report backs the push, quantifying recent price hikes and warning that more are coming.
Credit metric costs have gone from a range of $150 to $250 for a conventional loan in April 2024 to an average above $500, according to the Community Home Lenders of America. The cost also doubled between 2022 and 2023, going from around $50 to $100 or more.
"According to a recent survey of CHLA members, the 2026 figure is now $540 on average, more than 10 times the cost four years ago," the association wrote in the update to its earlier white paper.
CHLA's view of the issues
FICO, the three major credit bureaus and resellers all contributed to the price increase but the association called the score provider as the driving force behind the hike.
"While credit bureaus and resellers have also increased prices in recent years, these price additions have occurred at a slower percentage rate than the foundational FICO price jumps," CHLA wrote.
The association said it is forecasting another increase this fall because the company's financials show it relies heavily on the mortgage credit-score channel as the only business line with "high growth" sufficient to sustain a strong price-earnings ratio.
FICO and the credit bureaus — Equifax, Experian and TransUnion — all have seen their stock prices trend lower amid increased competition between them and calls from officials like Sen. Joshua Hawley, R-Mo., for scrutiny. Their prices have shown signs of stabilizing more recently.
The credit bureaus are behind VantageScore, which the association urged the GSEs and their oversight agency to swiftly implement in order to introduce more competition to FICO. FICO Classic has been the GSEs' only score for years.
The enterprises and their conservator plan to add FICO 10T and VantageScore 4.0 to fulfill a legislative mandate requiring more modern scores that analyze a broader range of data, including rental payment history.
In calling for the enterprises to implement VantageScore 4.0, the association urged them not to wait for the arrival of historical FICO 10T data necessary to also add that metric.
CHLA additionally suggested that Fannie and Freddie "establish their own business subsidiaries to evaluate the creditworthiness of borrowers," and later sell them off.
The GSEs' oversight entity, which was previously known as the Federal Housing Finance Agency, has been in the process of getting the 10T data available for rollout. Its current director, Bill Pulte, has rebranded it US Federal Housing.
FICO's response
FICO said in a statement responding to the CHLA's report that it has done what's necessary for the 10T rollout, which is now in enterprises' hands.
The score provider also confirmed that its wholesale royalty has been twice as high or higher in recent years when resold, but said this was done "without a corresponding increase from FICO."
The score provider also noted that its pricing model has changed over time and said the direct license program option it launched last year was designed to address broader cost pressures.
The direct license wholesale royalty fee is $4.95 per score "representing roughly a 50% reduction in the average per-score fees paid to tri-merge resellers due to the markups," FICO said, referencing the current requirement to get reports from all three bureaus for mortgages.
"A $33 funded loan fee per borrower per score applies only when a FICO-scored loan closes, replacing the prior secondary-use re-issue fee," the score provider said, noting that lenders can choose between this option and a $10 per score wholesale model.
Other costs
Roughly $500 or so of the total cost CHLA cites comes from other sources, according to FICO.
National Credit Reporting Association President Eric Ellman said in an email that the group's reseller members "agree that the cost of credit reports and scores are high and getting higher" but indeed that
"Since our members are price takers and not price makers we, like consumers, are cost sensitive," he said.
"We're curious about how CHLA arrived at its market cost assessment because its numbers seem inflated," Ellman added. "The NCRA strongly supports credit report and score competition. A marketplace with strong competition in these areas would promote pricing stability.
CHLA arrived at its cost estimate by asking its members to ballpark the expense per loan for credit reporting and scoring overall. The association then calculated an average.
The Consumer Data Industry Association, which represents credit reporting agencies, declined comment.
Some credit bureaus have said their price hikes are inflation based. Equifax, Experian and TransUnion also have respectively engaged in various new pricing structures and discounts designed to address the rising costs of credit metrics in the past year.
