Senator Josh Hawley, who chairs the Senate Judiciary Crime Subcommittee, has initiated an investigation into the pricing practices of Fair Isaac Corporation (FICO) for the credit scores widely used in mortgage origination. In letters sent this week, the senator requested 10 specific documents from FICO and separately asked the Federal Trade Commission to consider whether the company's pricing actions run afoul of antitrust laws.
TD Cowen analysts reviewing the correspondence note that neither letter contains an allegation that FICO has actually violated the law. Rather, the communications argue that FICO's pricing reflects outsized profitability and that the market for mortgage credit scores lacks meaningful competition.
The senator's letters characterize FICO's position in the mortgage score marketplace as effectively supported by state action. TD Cowen highlights the role of the Federal Housing Finance Agency (FHFA), pointing to its prolonged refusal to allow Vantage Score usage for loan pricing. The FHFA did approve Vantage Score last year, but it has not released the Loan Level Pricing Adjustment (LLPA) grid that lenders and originators require to apply the score to pricing.
TD Cowen interprets the investigation as implicitly criticizing FHFA Director Bill Pulte for preserving FICO's dominant position by not publishing the Vantage Score LLPA grid, rather than taking steps to reduce reliance on a single vendor. The analysts see the inquiry as directed at both the vendor dynamics and the regulator's handling of alternative scoring adoption.
One material risk identified for FICO is that the FHFA could respond to the scrutiny by publishing the Vantage Score LLPA grid. If that happens, TD Cowen expects lenders would likely obtain both FICO and Vantage Score results to identify which score yields the lower pricing adjustment for a given loan. Because the incremental cost of pulling an additional credit score is small relative to potential adjustments in loan pricing, lenders would have an incentive to price using whichever score delivers the most favorable outcome.
Overall, the letters frame the situation as a market access and regulator-response issue rather than an immediate allegation of unlawful conduct. The development places focus on the interaction between a dominant private vendor and a federal regulator tasked with managing permitted scoring options for mortgage market participants.