FICO falls 5.7% as Hawley launches pricing probe
Senator questions 100% price hike and near-monopoly position in mortgage credit scoring
Fair Isaac Corporation shares plummeted 5.7% on Monday, shedding roughly $64 to trade at $1,063, after Senator Josh Hawley opened an investigation into the credit scoring company's pricing practices in the mortgage market. The probe targets FICO's recent decision to double the per-score price from $4.95 to $10.00, a move that could increase industry-wide costs by approximately $500 million annually.
The investigation, launched through Hawley's capacity as chairman of the Senate Judiciary Subcommittee on Crime and member of the Antitrust, Competition Policy, and Consumer Rights subcommittee, challenges FICO's dominant market position. The Republican senator has urged both the Federal Trade Commission and Department of Justice to conduct parallel inquiries into potential antitrust violations.
"An 88% operating margin and a compound annual growth rate of 100% in per-score pricing over five years are not hallmarks of a competitive market," Hawley stated in letters to regulatory agencies. He characterized FICO's position as a "state-supported monopoly," noting the company has been the sole credit score accepted for conforming mortgage loans sold to government-sponsored enterprises Fannie Mae and Freddie Mac for decades.
FICO controls approximately 90% of the business-to-business credit scoring market, with its products used by virtually all major U.S. lenders. The San Jose-based company, which boasts a $26.7 billion market capitalization, has seen its stock decline 31.5% over the past three months amid mounting regulatory pressure.
The price increases have drawn criticism not only from lawmakers but also from housing affordability advocates. In addition to the 2026 doubling to $10.00 per score, FICO implemented a more than 40% hike in late 2024, raising the fee from $3.50 to $4.95. Senator Hawley argues these increases particularly harm first-time homebuyers already facing elevated housing costs.
The regulatory headwinds compound an existing shift in the competitive landscape. The Federal Housing Finance Agency approved VantageScore 4.0 alongside FICO scores for mortgages sold to Fannie Mae and Freddie Mac, effectively ending FICO's exclusive mandate effective January 1, 2026. Equifax has moved to capitalize on this opening, offering VantageScore at prices more than 50% below FICO's rates and providing free scores through year-end to customers purchasing FICO products.
Despite these challenges, FICO's underlying financial performance remains robust. The company reported first-quarter earnings of $7.33 per share, beating analyst estimates of $6.59, with revenue rising 16.4% year-over-year to $512 million. The Scores segment, which includes the mortgage credit scoring products, demonstrated particularly strong growth with a 29% revenue increase.
Analysts remain divided on the stock's outlook. Of 20 analysts covering the company, 15 maintain buy or strong-buy ratings with an average price target of $1,920, suggesting significant upside from current levels. However, the recent volatility and regulatory uncertainty have prompted some analysts to adopt more cautious stances, particularly as the company's high-margin business model faces direct challenges.
The Consumer Financial Protection Bureau has also begun examining competition in credit reporting and scoring, noting that mortgage lenders face limited choices and rising costs. This broader regulatory scrutiny suggests FICO's pricing power may face sustained pressure even as it navigates the specific Senate investigation.
FICO has not yet publicly responded to Senator Hawley's investigation. The company previously disclosed that a DOJ antitrust investigation into "exclusionary conduct" concluded in December 2020 without enforcement action, though reports indicate the Justice Department is currently conducting a new inquiry into similar practices.
For investors, the central question is whether regulatory interventions will successfully introduce meaningful competition into mortgage credit scoring—a market FICO has dominated for a generation—or whether the company's entrenched relationships with lenders and financial institutions will preserve its pricing advantage despite the political pressure.