FICO and Equifax drop after CFPB director talks ‘price gouging’

Consumer Financial Protection Bureau Director Rohit Chopra said yesterday at the Mortgage Bankers Association: The credit reporting industry is dominated by three players: Equifax, Experian, and TransUnion. The market for credit scores has long been dominated by one company’s algorithm: the Fair Isaac Corporation, which sells the FICO score. Mortgage lenders have shared that costs for credit reports and scores have increased, sometimes by 400% since 2022…For 2024, FICO now charges consumer reporting companies a licensing fee of $3.50 per FICO score used, or approximately $10 for all three scores if a lender obtains a tri-merge report and score bundle. That fee doubles if two borrowers apply together…In some circumstances, the Fair Credit Reporting Act capped certain fees for credit files at $8, adjusted for inflation, which now totals $15.50. The law also requires that fees for credit scores are “fair and reasonable,” as determined by the CFPB. This provision was originally administered by the Federal Trade Commission, which never offered a clear threshold. While these fee caps apply in specific circumstances described in the Fair Credit Reporting, it is clear that the mortgage industry needs to do more to share input on what, if anything, the CFPB should do to address price gouging in this market.” Shares of FICO (FICO) are down 5% to $1,378.58 in morning trading while Equifax (EFX) is down 4% to $240.70 and TransUnion (TRU) is down 1% to $77.74.