FICO is a publicly traded data analytics company, not a government agency or a utility. Engineer William R. "Bill" Fair and mathematician Earl Judson Isaac met at the Stanford Research Institute in Menlo Park and founded Fair, Isaac and Company in 1956 to replace a loan officer's gut feeling with a statistical model weighing payment history, debt and length of credit. It took two years and pitches to 50 American lenders before they sold their first credit scoring system in 1958. For three decades the firm mostly built custom scoring systems for individual lenders. It listed on the New York Stock Exchange in July 1987, and in 1989 it released the general-purpose FICO score with its 300 to 850 range.
The turning point came in 1995, when Fannie Mae and Freddie Mac began using FICO scores to decide which mortgages they would buy, making the score effectively mandatory for lenders who sell loans. By 2013 lenders bought more than 10 billion FICO scores a year. The company moved from San Rafael to Minneapolis and San Jose before opening a global headquarters in Bozeman, Montana, in 2016, and under CEO William Lansing it reports about $1.99 billion in revenue and over 3,800 employees. The Justice Department opened an antitrust probe in March 2020 and reportedly closed it by the end of that year. At least 10 class actions followed from credit unions, auto dealers, brokerages and mortgage lenders, and in September 2023 Judge Edmund Chang allowed them to proceed.
Between 1992 and 2019 FICO acquired more than 20 companies, mostly enterprise software, security and business rules firms rather than credit bureaus.
The 2002 purchase of HNC Software brought neural network fraud detection into the real-time approval of card transactions.
In the early 2000s the company shortened its name to Fair Isaac Corporation and leaned on the FICO acronym.
In March 2024 Senator Josh Hawley urged the Justice Department to investigate FICO over alleged pricing power in mortgage lending.
FICO's defense is that the market demanded one standard and that wide adoption is not the same as an illegal monopoly.
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