Do Credit Rating Agencies Still Have Credibility?

FICO created the best-known and most widely used credit score model in the United States. Despite this ,it has seen its shares lag over the past year. The credit rating industry has been under pressure since the beginning of the financial crisis in 2008. Fair Isaac Corporation or better known to Americans as FICO saw its revenue plunge over 25% in the last year. FICO and other credit rating companies like Moody's may have trouble in the future due to the changing financial landscape where people will rely less on their services.

Warren Buffet, famed investor and CEO of Berkshire Hathaway noted that Moody's Corporation has lost much of its competitive advantage during the recession. Over the last year Buffet has sold a large amount of stock in the company. The question is how will this industry change going forward?

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Fair Isaac Corporation (FICO) is a provider of analytic, software and data management products and services. FICO provides a range of analytical solutions, credit scoring and credit account management products and services to banks, credit reporting agencies, credit card processing agencies, insurers, retailers and healthcare organizations. The Company operates in four segments: Strategy Machine Solutions, Scoring Solutions, Professional Services and Analytic Software Tools. In June 2009, the Company sold the assets associated with its LiquidCredit for Telecom (LCT) and RoamEx product lines. LCT and RoamEx solutions were included primarily in its Strategy Machine segment.