Unfortunately, I Must Hand It to the Trump Administration in This One Instance

Moneybox Unfortunately, Trump’s Housing Guy Has a Point FICO’s monopoly on mortgages is finally loosening. Homebuyers aren’t the only ones who stand to benefit. By Enter your email to receive alerts for this author. Sign in or create an account to better manage your email preferences. Unsubscribe from email alerts Are you sure you want to unsubscribe from email alerts for Alex Kirshner? Oct 27, 20265:45 AM Photo illustration by Slate. Photos by Celal Gunes/Anadolu via Getty Images and Artur Widak/NurPhoto via Getty Images. Sign up for the Slatest to get the most insightful analysis, criticism, and advice out there, delivered to your inbox daily. To me, the Fair Isaac Corporation might be the most boring company in America. Everyone knows more or less what the company does: Issue a score that tells lenders how good it thinks you are with money. But I’d bet that a good chunk of us don’t realize it’s an actual company. FICO probably prefers it that way. The stock rose nearly 300 percent between the end of 2022 and November 2024. For mortgage lending, FICO used to be the only game in town, the score Fannie and Freddie required on the home loans they buy. Lenders needed FICO, and also passed on the escalating costs of a FICO score to people who wanted to buy or refinance homes. Lately, this very boring cash cow of a company has been on a wild ride, courtesy of the Trump administration’s housing regulator. The stock has lost more than half its value this year, and some of its biggest downturns have coincided with one of Donald Trump’s housing guys tweeting about the company. Is the Trump administration busting a monopoly that bilks the home-buying process for all it’s worth? Is it doing that in a way that benefits other unsavory figures, some of whom are trying to bribe the president? Yes. FICO makes its profits by selling FICO scores. The company has a formula that assesses how much of a credit risk each of us poses, and it licenses it to the big three credit bureaus: Equifax, Experian, and TransUnion. Those three bureaus made up just over half of the company’s revenue in fiscal year 2025, and it was a lot of revenue: FICO reported a profit of $1 billion from its “Scores” business that year, the overwhelming majority of its companywide profits. (There’s also a software business.) It’s been very good business for the company, especially because there has never been a serious competitor in the mortgage market, giving FICO a monopoly. (From the 1990s until this past year, Fannie and Freddie required a FICO score.) The three credit bureaus each pay FICO $10 every time they sell a FICO score to a mortgage lender. The price of that brick has gone up a lot in recent years, and just this year, it more than doubled, from $4.95 to $10, over the loud objection of Equifax. FICO has simply argued that its scores are worth what they cost. “We continue to believe that our score delivers tremendous value relative to what we charge,” the company’s CEO said in 2024. So, if I apply for a mortgage tomorrow, my lender probably pulls my credit from three different bureaus, and FICO makes $30. Let’s call that $60 if I put my wife on the application with me. (Car loans are similar, but they’re a smaller line of business and FICO isn’t a monopoly in that space.) This is how mortgages came to make up 62 percent of FICO’s “Scores” revenue in the most recently announced quarter. But FICO’s dominance rests on the cooperation of the Federal Housing Finance Agency, the regulator that oversees Fannie Mae and Freddie Mac. Those two government-controlled companies back something like half of U.S. mortgages. (As of 2021, it was 56 percent.) When a big mortgage lender (like Rocket or United Wholesale Mortgage) lends money to a homebuyer, they usually sell that mortgage, and Fannie and Freddie are the most frequent buyers. That Fannie and Freddie have required a FICO score and no other scores on every loan they’ve bought for decades has been awfully cool for FICO. Investors love legalized monopolies. But in May 2025, FHFA Director Bill Pulte started tweeting about the company’s recent price increase. (He’s the guy Treasury Secretary Scott Bessent threatened to punch in the face.) He said he was “extremely disappointed” by the hike, and the stock fell 15.7 percent that day. This was the beginning of a whipsawing that continues to this day, roiling a corner of the S&P 500. FICO is still, for now, printing money, but investors are worried about what will come. Believe it or not, Pulte has a point. Through 2022, a FICO mortgage score cost a lender about 60 cents. That is a lot less than $10. Lenders pass that cost to borrowers, perhaps in a “credit report fee,” and FICO’s share of that has gone from something like $1.80 to $30 per borrower. Yikes! In addition to a bunch of zesty posting about FICO, Pulte has helped to move a competitor, VantageScore, into the mix for Fannie- and Freddie-backed mortgages. The feds began accepting loans that came with the competitor’s score in April of this year. These scores cost either $1 or nothing at all at the three major credit bureaus, rather than the $10 it takes to get a FICO score. (This competitor was not Pulte’s idea. The Biden administration first approved it in 2022, but it takes years for mortgage reforms to work their way through the federal bureaucracy.) A juicy plot-thickener here: The three credit bureaus created and own VantageScore, devising it as a way to pay less for credit scores. They’re still FICO’s customers but have also become its biggest rivals. For FICO, the hits have kept on coming. For a short time, VantageScores were treated as less sacred than FICO scores, so someone with a higher VantageScore might get the same loan terms as someone with a lower FICO score. But at the start of October, Fannie and Freddie, at Pulte’s direction, moved to a single “pricing grid,” making a 750 VantageScore worth the same thing as a 750 FICO score. A VantageScore now costs a lender less and offers the same theoretical terms as a FICO. This looks like the end of a long-standing monopoly. FICO says it supports a “competitive environment” and says that it’s “bad policy” to let lenders pick between various scores, because it encourages “gaming” by the lenders. (You could imagine a mortgage lender shopping for the highest score an applicant produces, so the loan looks safer than it is and gets cheaper pricing from Fannie and Freddie, which are left holding the risk.) It says its newest score is the “most predictive” in the market, in a space where accurately assessing credit risk seems rather important. This all seems fair enough but does not really explain why the government should feel good about creating a monopoly via mortgage rules and watching it raise prices exponentially. Rocket and United Wholesale Mortgage, the two biggest mortgage lenders, love this. Rocket has already made VantageScore its preferred score, claiming it tested VantageScore’s effect on applications and found that borrowers who saved with it averaged $1,600 in savings at closing. UWM is pulling both scores and says it uses whichever one is better for the borrower. FICO boasts of a continued partnership: “As the industry standard in credit risk assessment, FICO Scores remain a critical component of UWM’s credit evaluation process.” Did a Rocket subsidiary donate $10 million to Donald Trump’s personal bribery racket in the form of the White House ballroom project? Yes, about three weeks after Pulte’s agency approved Rocket’s purchase of the mortgage company Mr. Cooper. (That’s a company name, not a person.) But fortunately, Rocket says the donation and approval were not related. Whew! Would Pulte ever use the machinery of the federal mortgage lending apparatus to reward friends or punish enemies? Yes, obviously. Pulte’s accusations of mortgage fraud against New York Attorney General Letitia James, Sen. Adam Schiff, and Federal Reserve board member Lisa Cook speak for themselves. In late September, this political retribution merchant took a woodchipper to his agency’s inspector general’s office, a thing you might do if you were considering doing things you didn’t want the public to see. Also a winner, sort of: the three credit bureaus, who, again, own VantageScore. Equifax’s stock is up 20 percent over the last month after cratering for much of the year. However, Pulte has also made noise about cutting into the bureaus’ business, calling them overchargers and teasing that the FHFA might move toward “bi-merge” credit checks where just two bureaus report data, rather than all three. Such a move would mean the three bureaus fighting over business that currently flows to all of them. Is this guy trying to pick on the credit bureaus or help them? A bit of both, it seems. It’s sometimes not clear if Pulte’s job is to serve Trump by lowering the cost of housing or by being a political enforcer. Maybe a bit of both? Anyway, that move to cut into the bureaus’ business has not happened yet. Pulte was expected to announce that policy change at an industry event, but he skipped it to campaign with Trump, according to Inside Mortgage Finance. Personally, I trust him. FICO’s fee increases are extremely annoying but probably will not break your bank. The company gets about $30 whenever a lender pulls your credit, or $60 for a couple. The addition of a second credit score is a bigger financial deal for what it could say about your loan terms if you’re taking out a mortgage. Fannie and Freddie use score bands to price their loans, and now VantageScore gets the same pricing treatment as FICO. An Urban Institute study of about 27.5 million loans found something interesting: VantageScore generates a higher score by an average of 13 points compared to the classic FICO formula. That could rotate plenty of borrowers into a more favorable “band” that gets them lower upfront fees and better borrowing rates. FICO introduced its own modernized score in 2020. That was three years after the latest version of VantageScore came out and two years after Congress told Fannie and Freddie to consider rivals to FICO. A study says FICO’s newer formula, which Fannie and Freddie still can’t accept, “shows the highest measure of predictive power.” You will never guess who commissioned that report. (OK, yes you will: It was FICO.) There’s also the matter of Fannie and Freddie being taxpayer-backed. Ideally, enhanced competitiveness in the credit score market would not lead to a bunch of overzealous loans going out to buyers who can’t pay them off, which we’ve seen already from the 2008 housing crisis. We’ll cross that bridge if and when we notice it’s burning—again. Donald Trump Housing Personal Finance Finance