NCRA Sets The Record Straight On Credit Score Price Increases
The National Consumer Reporting Association (NCRA) addressed industry misconceptions about recent FICO score price increases in mortgage lending.
Recent industry articles have implied that credit resellers may in part be responsible for the substantial price increases in credit scores. However, the NCRA emphasizes that its members pass along price increases as provided to them by the national consumer reporting agencies (the Bureaus). While resellers may adjust their fees to reflect these changes, the substantial increases do not stem from the resellers. Resellers have little control over pricing, as they must pay the Bureaus prices.
On November 6, 2024, Fair Issac Corp. (FICO) announced that it has increased its royalty, per borrower per Bureau, for the third consecutive year. FICO sets the wholesale cost of the score model to the Bureaus, who own the data upon which the score is calculated. The Bureaus may then add their own margins to both the wholesale cost of their credit data and the credit score when sold to the credit resellers. While the resellers may add minimal mark up to remain competitive, the resellers are put in an impossible position to defend their pricing because their contracts with the Bureaus prohibit disclosing the Bureaus’ pricing. The resellers have no choice but to pay whatever annual price increase the Bureaus dictate: resellers are not the cause of recent pricing increases.
The reseller market, while much smaller than it used to be (about 30 independent companies today, compared to approximately 300 independent companies less than 20 years ago), is a very competitive environment. The resellers actively compete for the mortgage lenders business on all aspects of the process, including the cost of the tri-merge reports, loan origination system interface technology, and customer service.
The NCRA remains steadfast in its dedication to transparency and fairness in consumer reporting. The NCRA continues to advocate for equitable pricing practices within the industry and urges FICO and the Bureaus to provide transparency for these significant price increases.
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