It’s official! FICO raises score price to $4.95

Fair Isaac Corp. (FICO), the company that retains the rights to the market’s widely adopted consumer credit-risk assessment methodology, announced on Wednesday that it has increased its wholesale royalty from $3.50 to $4.95 per score for mortgage originations.

The mortgage industry is now bracing for additional hikes from the credit reporting bureaus and other companies downstream of FICO.

“At this new per-score royalty, the amount collected by FICO will remain a small percentage of the cost of the tri-merge credit report and score bundle (on average approximately 15% of the $80 to well over $100 tri-merge bundle cost), which is itself an exceedingly small share of overall mortgage closing costs,” Jim Wehmann, FICO executive vice president, wrote in a blog post.

Wehmann added that, after the change, “FICO’s share will remain only approximately two-tenths of one percent” of the total average closing costs of $6,000.

In the blog post, Wehmann claimed there was “misinformation” across the Internet regarding the fee hikes, which some mortgage pros called “price gouging” and “junk fees.”

“At $4.95 per score, the royalty collected by FICO for mortgage is entirely fair and reasonable, particularly considering the significant benefits it brings to the industry,” he said, adding that the new royalty is only the fourth royalty change in the mortgage industry in 30 years.

“Importantly, after our upcoming royalty change, all amounts above $4.95 per score are collected and retained by the credit bureaus or their tri-merge resellers—not FICO. This means, after this change, any price increase greater than $1.45 per score is solely due to prices set by others who sell and distribute the scores.”

Mortgage industry executives told HousingWire they expect the credit reporting bureaus and aggregators to pass on the FICO cost increases and pad their own fees on top. Those companies are threatened by revenue from trigger leads to drying up with new legislation.

How we got here

Analysts and mortgage executives expected an increase from FICO after the election. But the bets were at a higher level, at $5. However, the credit bureaus—TransUnion, Experian, and Equifax—were notified about the changes on Oct. 30, when they started communicating with some clients, FICO said. 

It’s the third straight year of increases in FICO scores, which has received criticism from the industry. The royalties rose to $0.50 to $0.60 per FICO score in 2018. In 2023, a tier-based structure of $0.60 to $2.75 per score was implemented, which increased prices for some lenders by up to 400%.

After complaints from lenders, FICO returned to a fixed royalty of $3.50 per FICO score in 2024. But it collected the same per-score price for soft pulls and hard pulls.

These moves come as Fannie Mae and Freddie Mac move away from the current Classic FICO credit score model. They will require lenders to use two credit scores generated by the FICO Score 10 T and the VantageScore 4.0 models, which are considered more inclusive than their predecessors.

Reaction from the mortgage industry

The mortgage industry quickly responded with frustration at the news of a 41% increase from the prior year.

Taylor Stork, the president of Community Home Lenders of America, said his organization, which represents small lenders, “remains concerned by FICO’s unnecessary and unwarranted price increases, combined with the bureaus’ mark-ups, that will no doubt be passed onto the borrower.”

“Unfortunately, we’re likely in the early innings of the increase process,” said Greg Sher, the Managing Director of NFM Lending and a vocal critic of the fee hikes. “Until production picks up significantly, FICO is going to be counting on the mortgage industry to keep them profitable because they can. Who is going to stop them?”

In a statement, Mortgage Bankers Association President and CEO Bob Broeksmit said the industry has voiced frustration with the “lack of transparency” behind the ongoing price hikes for tri-merge credit reports and other credit reporting products.

“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.”