C’mon, FICO! Another Fee Hike for 2026?

FICO is doubling its price for issuing a credit score — from $4.95 to $10. According to the Equifax credit data company, this hike will potentially raise credit report costs across the industry by $100 million.

Now, mortgage lenders need to decide whether to eat the extra cost, or make mortgage applicants cover the added costs through upfront credit report fees.

This, at a time when potential borrowers are crying out for affordable pathways to homeownership.

Here’s a Q&A on what it all means.

What Is the FICO^® Score?

In 1989, the credit data company Fair Isaac Corp. introduced its FICO® Score. It cost about 50 cents to order a score. Things stayed that way for many years.

In 2018, Fair Isaac started raising the price of a report. It’s now $4.95. Of course, that adds up because millions of people apply for mortgages each year. But most individual home buyers don’t pay attention to a five-dollar charge in the haystack of closing costs.

FICO’s scoring algorithm uses an applicant’s credit data, obtained from the “big three” credit corporations: Equifax®, Experian® and TransUnion®.  It typically works this way:

• Equifax, TransUnion, and Experian collect individuals’ personal and financial details, and use them to build credit files on borrowers. The FICO algorithm is licensed for use by these firms.

• Blending the data from the three credit reporting firms results in one score. This “tri-merge” score goes to the applicant’s lender, who discerns whether an applicant qualifies for a mortgage.

• The lender also uses the blended score to set the borrower’s interest rate.

The tri-merge credit score system applies to conventional loans backed by Fannie Mae and Freddie Mac, and to government-backed mortgages, too.

Only some of these mortgages will receive final approval. Most will not. FICO charges for all of them. Ultimately, successful mortgage applicants are paying to cover all of the fees charged to lenders.

What Do Mortgage Companies Think About the Forthcoming FICO Price Hike?

Bob Broeksmit is CEO of the Mortgage Bankers Association. Broeksmit has slammed the “flawed, outdated and anticompetitive” process that forces lenders to order increasingly costly credit reports that add to the cost of home mortgages.

The Mortgage Bankers Association wants the federal government to let lenders use a single-pull credit report instead of having to pull from three reporting companies.

Does everyone in the industry agree? No. Whether to blend all three companies’ data has been the subject of a long and heated debate.

Some call them “junk fees”: All the extras a home buyer pays are still out of control.

Would Dropping the “Tri-Merge” Process Help Applicants Get Mortgages?

Dan Smith leads the Consumer Data Industry Association. This group identifies itself as “the voice of the consumer reporting industry.”

Smith recently wrote an op-ed which appeared in the American Banker, and was quoted in Mortgage Professional America magazine. Smith wrote about the latest research from TransUnion and Equifax, which “demonstrates the dangers of eliminating even one bureau from the process.”

Equifax pointed to the effects of cutting out one reporting company from the blend. The resultant “bi-merge” model could  put 27.8 million applicants into lower score tiers and leave 10 million people out of approvals. Equifax stated that more than a fourth of the total applicant pool would wind up declined rather than approved.

What about the TransUnion data? Here’s what it shows, according to Dan Smith. With only a single pull or a bi-merge process, those who are approved (from lower score tiers) could be charged  $6,600 more in interest over the term of the mortgage.

And we can see that pressing the industry away from the traditional tri-merge model would likely prompt all these companies to hike the prices of their data still further, to make up for lost revenues. In short, while shifting away from the three-player club that controls applicants’ credit scores seems like a no-brainer for cost savings, the devil is in the details.

Can the Federal Government Change the Credit Reporting System?

Fair Isaac and the big three credit data companies answer to no direct government overseer. The companies who, together, control the score reports for mortgage applications can set their own terms. No federal regulatory body is in place to keep the fee hikes in check. 

Bill Pulte, who directs the Federal Housing Finance Agency, has urged FICO to lower its costs. Pulte has also pressed for competition in the credit report world. Pulte’s agency has directed Fannie Mae and Freddie Mac to let lenders use VantageScore® 4.0. That algorithm comes from VantageScore Solutions LLC, a FICO competitor. 

VantageScore® lets rent payments be counted in the applicant’s credit profile. So, it could make the application process more democratic. Fannie and Freddie are working on new lending guidelines to accommodate this addition. But most lenders still apply the FICO model.

How Did FICO^® Respond to Calls for More Competition?

In October, FICO opened access to its scoring algorithm to more companies. This would allow for an option to bypass the big three credit data firms.

But FICO would tack on $99 for every loan closed with the new scoring model, which the buyers would pay. So, either way, FICO is pressing their prices upward.

Could Portable Credit Reports Cut Down on the Fees?

Brendan McKay co-founded the Broker Action Coalition. McKay is calling on the industry to let all applicants use the same credit report when they’re shopping for different mortgages. Why, after all, should an individual have to let lenders pull their credit reports each time — incurring multiple fees?

Following McKay’s call, the industry could offer a common website for applicants to download their credit reports. Or the companies could let applicants visit their sites and pull their own reports.

With portable credit reports that applicants can take to any mortgage consultant, individual buyers would see exactly how much they’re charged for a credit pull. This would offer transparency to borrowers, as well as streamlined charges.

No Set Answers, But Something’s Got to Give

The FICO announcement is testing people’s patience right now. Brendan McKay of the Broker Action Coalition feels mortgage professionals are already dealing with home affordability challenges. And now comes FICO, with a 2026 fee hike. As McKay told Mortgage Professional America, lenders and brokers find FICO “pushing us past the breaking point.”

No doubt, millions of people facing the high costs of home buying completely agree.