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FICO
American credit score services company

FICO, legally known as Fair Isaac Corporation, is an American data analytics company headquartered in Bozeman, Montana. Founded in 1956 by Bill Fair and Earl Isaac, it specializes in credit scoring services. Its most well-known product, the FICO score, is widely used to assess consumer credit risk and has become essential in U.S. consumer lending. In 2013, over 10 billion FICO scores were purchased by lenders, while about 30 million consumers accessed their own scores. The company reported revenues of $1.29 billion in the 2020 fiscal year, highlighting its significant role in financial analytics.

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History

FICO was founded in 1956 as Fair, Isaac and Company by engineer William R. "Bill" Fair and mathematician Earl Judson Isaac.5 The two met while working at the Stanford Research Institute in Menlo Park, California.6 Selling its first credit scoring system two years after the company's creation,7 FICO pitched its system to fifty American lenders.8

FICO went public in July 19879 and is traded on the New York Stock Exchange.10 The company debuted its first general-purpose FICO score in 1989.11 FICO scores are based on credit reports and "base" FICO scores range from 300 to 850,12 while industry-specific scores range from 250 to 900.13

Lenders use the scores to gauge a potential borrower's creditworthiness.14

Fannie Mae and Freddie Mac first began using FICO scores to help determine which American consumers qualified for mortgages bought and sold by the companies in 1995.15

Name changes

Originally called Fair, Isaac and Company (hence the abbreviation FICO), this name was changed to Fair Isaac Corporation in 2003.16

Headquarters moves

Originally based in San Rafael, California, FICO moved its headquarters to Minneapolis, Minnesota, in 2004, a few years after Minnesota resident Thomas Grudnowski took over as CEO.17 In 2013, it moved its headquarters to San Jose, California, a year after CEO William Lansing joined.18 In 2016 it opened an office in Bozeman, Montana which later became its headquarters.19

Acquisitions

  • DynaMark 199220
  • Risk Management Technologies 199721
  • Prevision 199722
  • Nykamp Consulting Group 200123
  • HNC Software 200224
  • NAREX 200325
  • Diversified Healthcare Services 200326
  • Seurat (2003)27
  • London Bridge Software 200428
  • Braun Consulting 200429
  • RulesPower 200530
  • Dash Optimization 200831
  • Entiera 201232
  • Adeptra 201233
  • CR Software 201234
  • Infoglide 201335
  • InfoCentricity 201436
  • Karmasphere 201437
  • TONBELLER AG 201538
  • QuadMetrics 201639
  • GoOn 201840
  • EZMCOM 201941

Antitrust issues

In March 2020, the US Department of Justice (DOJ) opened an antitrust investigation into FICO, which was reported to be closed in December 2020.4243 In March 2024, US Senator Josh Hawley sent a letter to the DOJ's Antitrust Division urging them to open an investigation into FICO for anti-competitive practices, stating that the company "appears to be using its monopolistic power over the credit scoring market to increase costs for mortgage lenders."444546

Between 2020 and 2023, at least 10 antitrust class action lawsuits were filed against FICO involving "business to business" purchases of FICO scores, with the plaintiffs alleging that FICO maintains monopoly power through anticompetitive agreements and charges artificially inflated prices for FICO scores.4748 In September 2023 US District Judge Edmond Chang ruled that the plaintiffs, which include credit unions, banks, mortgage lenders, real estate brokerages, auto dealers, and other companies, had presented enough evidence that FICO had violated antitrust law to allow the lawsuits to proceed.4950

Operations

FICO is headquartered in Bozeman, Montana and it has additional U.S. locations in San Jose, California, Roseville, Minnesota, San Diego, California, San Rafael, California, Fairfax, Virginia, and Austin, Texas.51

The company has international locations in Australia, Brazil, Canada, China, Germany, India, Italy, Japan, South Korea, Lithuania, Malaysia, the Philippines, Poland, Russia, Singapore, South Africa, Spain, Taiwan, Thailand, Turkey, and the United Kingdom.52

FICO score

Main article: Credit score in the United States § FICO score

See also: Criticism of credit scoring systems in the United States

A measure of credit risk, FICO scores are available through all of the major consumer reporting agencies in the United States: Equifax, Experian, and TransUnion.53 FICO scores are also offered in other markets, including Mexico and Canada,54 as well as through the fourth U.S. credit reporting bureau, PRBC.55

References

  1. "How FICO became 'the' credit score". finance.yahoo.com. 2013-12-12. Retrieved 2018-08-25. https://finance.yahoo.com/news/fico-became-credit-score-100000037.html ↩

  2. Ann Carrns (10 May 2012). "Is That Credit Score a FICO, or a FICO 8?". New York Times. Retrieved 21 October 2014. https://bucks.blogs.nytimes.com/2012/05/10/is-that-credit-score-a-fico-or-a-fico-8/ ↩

  3. Evan Nemeroff (7 March 2014). "New FICO Scoring Model Coming This Summer". National Mortgage News. Retrieved 21 October 2014. http://www.nationalmortgagenews.com/news/technology/new-fico-scoring-model-coming-this-summer-1041282-1.html ↩

  4. "Fair Isaac Corp (FICO) Q4 2020 Earnings Call Transcript". The Motley Fool. 2020-11-10. Retrieved 2021-05-04. https://www.fool.com/earnings/call-transcripts/2020/11/10/fair-isaac-corp-fico-q4-2020-earnings-call-transcr/ ↩

  5. Dean Foust; Aaron Pressman (2008-02-06). "Credit Scores: Not-So-Magic Numbers". Bloomberg.com. Archived from the original on August 14, 2012. Retrieved 2014-11-02. https://web.archive.org/web/20120814173235/http://www.businessweek.com/stories/2008-02-06/credit-scores-not-so-magic-numbers ↩

  6. Jennifer Bjorhus (2013-01-04). "Fair Isaac moving its HQ back to California". Star Tribune. Retrieved 2014-11-02. http://www.startribune.com/business/185665572.html ↩

  7. About Us | FICO — FICO official Web site https://www.fico.com/en/about-us#our_history ↩

  8. Adriene Hill (2014-04-22). "A brief history of the credit score". Retrieved 2014-11-02. http://www.marketplace.org/topics/your-money/how-i-learned-stop-worrying/brief-history-credit-score ↩

  9. "Notice of Annual Meeting of Stockholders of Fair, Isaac and Company, Incorporated". FICO.com. December 30, 1996. Retrieved June 13, 2023. https://investors.fico.com/node/13956/html ↩

  10. Dean Foust; Aaron Pressman (2008-02-06). "Credit Scores: Not-So-Magic Numbers". Bloomberg.com. Archived from the original on August 14, 2012. Retrieved 2014-11-02. https://web.archive.org/web/20120814173235/http://www.businessweek.com/stories/2008-02-06/credit-scores-not-so-magic-numbers ↩

  11. Ann Carrns (10 May 2012). "Is That Credit Score a FICO, or a FICO 8?". New York Times. Retrieved 21 October 2014. https://bucks.blogs.nytimes.com/2012/05/10/is-that-credit-score-a-fico-or-a-fico-8/ ↩

  12. Ann Carrns (10 May 2012). "Is That Credit Score a FICO, or a FICO 8?". New York Times. Retrieved 21 October 2014. https://bucks.blogs.nytimes.com/2012/05/10/is-that-credit-score-a-fico-or-a-fico-8/ ↩

  13. "What is a FICO score?". MyFICO.com official website. Fair Isaac Corporation. Retrieved 2016-11-11. http://www.myfico.com/credit-education/credit-report-credit-score-articles/ ↩

  14. Ann Carrns (2012-05-03). "Report Finds Improvement in Credit Scores". Retrieved 2014-11-02. https://bucks.blogs.nytimes.com/2012/05/03/report-finds-improvement-in-credit-scores/ ↩

  15. "North American Credit Scoring & Reporting". benbest.com. 2009-12-04. Retrieved 2015-05-13. http://www.benbest.com/business/credit.html ↩

  16. About Us | FICO — FICO official Web site https://www.fico.com/en/about-us#our_history ↩

  17. Dan Fost (11 May 2004). "Fair Isaac moving its hub / Most company executives already set up in Minnesota". SFGate. Retrieved 21 October 2014. http://www.sfgate.com/business/article/Fair-Isaac-moving-its-hub-Most-company-2760210.php ↩

  18. Pete Carey (4 January 2013). "FICO moves headquarters to San Jose". Mercury News. Retrieved 21 October 2014. http://www.mercurynews.com/ci_22307524/fico-moves-headquarters-san-jose ↩

  19. "Silicon Valley Analytics Pioneer FICO Announces Expansion in Bozeman, Montana". FICO. Retrieved 2022-09-21. https://www.fico.com/en/newsroom/silicon-valley-analytics-pioneer-fico-announces-expansion-bozeman-montana ↩

  20. "FICO consolidating operations in Roseville". twincities.com. 2012-06-22. Retrieved 2014-10-30. http://www.twincities.com/ci_20918752/fico-consolidating-operations-roseville ↩

  21. "RMT Merges with Fair, Isaac". July 1997. Archived from the original on 2016-03-04. Retrieved 2014-10-30. https://web.archive.org/web/20160304040955/http://www.contenthouse.com/rmt/newspg/radrscp/fi-mergr.htm ↩

  22. "Bruce D D'Ambrosio". buy-sell-econtent.com. Archived from the original on 2016-03-04. Retrieved 2015-05-14. https://web.archive.org/web/20160304185359/http://www.buy-sell-econtent.com/2011/Speakers/BruceDAmbrosio.aspx ↩

  23. "Fair, Isaac to acquire Nykamp Consulting". 2001-12-12. Retrieved 2014-10-30. http://www.bizjournals.com/sanjose/stories/2001/12/10/daily24.html ↩

  24. Fost, Dan (2002-04-30). "Fair Isaac merging with HNC Software". Sfgate. http://www.sfgate.com/business/article/Fair-Isaac-merging-with-HNC-Software-2844440.php ↩

  25. "Narex sold for $10M". 2003-07-28. Retrieved 2014-10-30. http://www.bizjournals.com/denver/stories/2003/07/28/daily7.html ↩

  26. "Fair Isaac Acquires Diversified HealthCare". Los Angeles Times. 2003-09-19. Retrieved 2014-10-30. https://www.latimes.com/archives/la-xpm-2003-sep-19-fi-rup19.6-story.html ↩

  27. "California firm buys Seurat". 2003-10-06. Retrieved 2014-10-30. http://www.bizjournals.com/charlotte/stories/2003/10/06/daily7.html ↩

  28. "Fair Issac offers $166m for London Bridge Software". 2004-04-26. http://www.stockmarketwire.com/article/345520/Fair-Issac-offers-166m-for-London-Bridge-Software.html ↩

  29. "Fair Isaac and Braun Consulting Announce Acquisition Agreement". 2004-09-24. Retrieved 2014-10-30. http://www.information-management.com/news/1010825-1.html ↩

  30. "Fair Isaac Acquires RulesPower Technology to Advance Business Rules Capabilities". 2005-09-28. Retrieved 2014-10-30. http://www.information-management.com/news/1038322-1.html ↩

  31. "Fair Isaac Acquires Dash Optimization, Bringing Increased Power". Bloomberg News. Retrieved 2014-10-30. https://www.bloomberg.com/apps/news?pid=newsarchive&sid=aB0dtBZx6z.k ↩

  32. Howard Pankratz (2012-05-09). "Denver-based Entiera acquired by FICO". Retrieved 2014-10-30. http://www.denverpost.com/ci_20582831/denver-based-entiera-acquired-by-fico ↩

  33. "FICO completes $115M acquisition of Adeptra". finance.yahoo.com. Yahoo!. September 10, 2012. Retrieved 4 November 2014. https://finance.yahoo.com/news/fico-completes-115m-acquisition-adeptra-175112495.html ↩

  34. Ed Stych (2012-11-26). "FICO buys collections and receivables software company". Retrieved 2014-10-30. http://www.bizjournals.com/twincities/news/2012/11/26/fico-buys-cr-software.html ↩

  35. "Infoglide Software acquired by credit score giant FICO". 2013-04-04. Retrieved 2014-10-30. http://www.bizjournals.com/austin/blog/abje_news/2013/04/infoglide-software-acquired-by-credit.html ↩

  36. "FICO Set to Acquire InfoCentricity". 2014-03-14. Retrieved 2014-10-30. http://www.nasdaq.com/article/fico-set-to-acquire-infocentricity-analyst-blog-cm335560 ↩

  37. "FICO Adds Big Data Analytics for Hadoop to FICO Analytic Cloud". 2014-05-16. Retrieved 2014-10-30. http://www.marketwatch.com/story/fico-adds-big-data-analytics-for-hadoop-to-fico-analytic-cloud-2014-04-16 ↩

  38. "FICO Acquires TONBELLER". Archived from the original on 2015-06-07. Retrieved 2015-05-21. https://web.archive.org/web/20150607223618/http://www.fico.com/en/FICO-acquires-TONBELLER ↩

  39. "FICO Will Offer Enterprise Security Score for Organizations". Retrieved 2016-11-02. https://www.fico.com/en/newsroom/fico-will-offer-enterprise-security-score-for-organizations-06-14-2016 ↩

  40. "FICO Acquires GoOn to Advance Growth in Brazil". Retrieved 2016-11-02. https://www.fico.com/en/newsroom/fico-acquires-goon-to-advance-growth-in-brazil ↩

  41. "FICO Acquires EZMCOM". Retrieved 2019-10-02. https://www.fico.com/en/ezmcom-faq ↩

  42. Nylen, Leah (2020-03-13). "DOJ opens antitrust probe into credit score giant Fair Isaac". Politico. Archived from the original on 2023-03-14. Retrieved 2024-06-26. https://www.politico.com/news/2020/03/13/justice-fair-isaac-antitrust-129204 ↩

  43. "FICO Announces DOJ Antitrust Investigation Closed". FICO. 2020-12-08. Archived from the original on 2021-04-22. Retrieved 2024-06-26. https://www.fico.com/en/newsroom/fico-announces-doj-antitrust-investigation-closed ↩

  44. KTTN News (2024-03-13). "FICO faces scrutiny for anti-competitive behavior in credit scoring". KTTN-FM. Archived from the original on 2024-03-13. Retrieved 2024-06-26. https://web.archive.org/web/20240313094522/https://www.kttn.com/fico-faces-scrutiny-for-anti-competitive-behavior-in-credit-scoring/ ↩

  45. Albright, Ty (2024-03-12). "Hawley calls on DOJ to investigate FICO for anti-competitive practices". KZRG. Archived from the original on 2024-03-27. Retrieved 2024-06-26. https://newstalkkzrg.com/2024/03/12/hawley-calls-on-doj-to-investigate-fico-for-anti-competitive-practices/ ↩

  46. Nunes, Flávia Furlan (2024-03-21). "Senator urges DOJ to investigate FICO over increasing costs to mortgage lenders". HousingWire. Archived from the original on 2024-05-20. Retrieved 2024-06-26. https://web.archive.org/web/20240520234927/https://www.housingwire.com/articles/senator-urges-doj-to-investigate-fico-over-increasing-costs-to-mortgage-lenders/ ↩

  47. Scarcella, Mike (2023-09-29). "FICO loses bid to dismiss antitrust claims over credit-scoring market". Reuters. Retrieved 2024-06-26. https://www.reuters.com/legal/transactional/fico-loses-bid-dismiss-antitrust-claims-over-credit-scoring-market-2023-09-29/ ↩

  48. "FICO Loses Bid to Dismiss Antitrust Claims Over Credit-Scoring Market". Competition Policy International. 2023-10-01. Archived from the original on 2024-06-26. Retrieved 2024-06-26. https://www.pymnts.com/cpi_posts/fico-loses-bid-to-dismiss-antitrust-claims-over-credit-scoring-market/ ↩

  49. Scarcella, Mike (2023-09-29). "FICO loses bid to dismiss antitrust claims over credit-scoring market". Reuters. Retrieved 2024-06-26. https://www.reuters.com/legal/transactional/fico-loses-bid-dismiss-antitrust-claims-over-credit-scoring-market-2023-09-29/ ↩

  50. "FICO Loses Bid to Dismiss Antitrust Claims Over Credit-Scoring Market". Competition Policy International. 2023-10-01. Archived from the original on 2024-06-26. Retrieved 2024-06-26. https://www.pymnts.com/cpi_posts/fico-loses-bid-to-dismiss-antitrust-claims-over-credit-scoring-market/ ↩

  51. "Office Locations". Archived from the original on 2014-11-04. Retrieved 2014-10-30. https://web.archive.org/web/20141104014113/http://www.fico.com/en/about-us/locations/ ↩

  52. "Office Locations". Archived from the original on 2014-11-04. Retrieved 2014-10-30. https://web.archive.org/web/20141104014113/http://www.fico.com/en/about-us/locations/ ↩

  53. Credit Reporting Agencies — FICO official Web site https://www.fico.com/en/Partners/Pages/Credit-Reporting-Agencies.aspx ↩

  54. "FICO Score for International Markets". fico.com. FICO. 2017. https://www.fico.com/en/products/fico-score-international-markets ↩

  55. Fair Isaac and PRBC Team Up to Enhance Credit Risk Tools Used by Mortgage Industry — FICO official Web site https://www.fico.com/en/Company/News/Pages/11-14-2007.aspx ↩