Senator Josh Hawley from Missouri has requested the Department of Justice to investigate Fair Isaac Corporation (FICO), accusing the company of abusing its monopoly in the credit scoring market.
Allegations of Monopoly
In a letter to Assistant Attorney General Gail Slater, Hawley stated that FICO dominates approximately 90% of the business-to-business credit scoring market. He noted that the company benefits from a sweetheart deal with the federal government, as its credit scores are mandated for loans issued by various government entities.
Price Increases on Credit Scores
According to Hawley, FICO has raised prices multiple times, significantly boosting its profits while negatively impacting working Americans. The latest increase occurred at the end of last year, as the price of scores for mortgage originations rose from $3.50 to $4.95.
Market Valuation Changes for FICO
Barclays has lowered the price target for FICO shares from $2,350 to $2,250 while maintaining an 'Overweight' rating. Analysts indicate that credit bureaus are at significant risk of negative revisions due to new tariffs that may increase prices and recession risks.
Senator Hawley expresses concern over FICO's monopoly position and calls for an investigation into its practices. These issues raise important questions about pricing in the credit scoring market and its effects on consumers.
