Cost of credit reports for mortgages center of debate. What to know

There’s a line item in homebuyers’ closing costs that’s causing a clash in the mortgage industry: the fee for lenders to check borrowers’ credit.

While the charges — typically in the tens or hundreds of dollars — represent a tiny slice of the amount that buyers pay when a home purchase is finalized, the cost has risen sharply in recent years. Costs in 2026 could rise an average 40% to 50%, according to a Dec. 12 letter from the Mortgage Bankers Association to Federal Housing Finance Authority Director Bill Pulte.

The trade association asked the FHFA to give mortgage lenders the option of relying on a single credit report instead of three — known as a “tri-merge” report — for borrowers with a credit score of 700 or higher.

Although lenders generally have required a minimum credit score of 620 (on a typical scale of 300 to 850), Fannie Mae, a government-sponsored enterprise and buyer of mortgages, said in November that applications processed through its automated underwriting system would no longer require a minimum score.

Nevertheless, most homebuyers have higher credit scores, and so stand to benefit from such a change. In 2024, the average credit score for a first-time homebuyer was 734, according to the Federal Reserve Bank of New York. For repeat buyers, the average score was 775.

The FHFA oversees Fannie Mae and Freddie Mac, which are the largest purchasers of mortgages on the secondary market. Currently, lenders that want to sell mortgages to Fannie and Freddie — most do, because those transactions provide them with capital to make more loans — must use a tri-merge report, which reflects credit scores and reports from the three largest credit-reporting companies: Equifax, Experian and TransUnion.

“The cost of the requirement to have a tri-merge report has gone up exponentially,” said Al Bingham, a loan officer with mortgage lender Momentum Loans in Sandy, Utah. “It’s nuts.”

Of course, credit reporting fees are only one of many expenses that have jumped in recent years, both for housing and in the broader economy. And for homebuyers, the rising fees they pay for credit reports and scores might go unnoticed next to much larger numbers when they settle on their loan.

Buyers face other closing costs, including loan origination and underwriting fees, as well as agent commissions and expenses such as a home appraisal or inspection. Collectively, those costs generally range from 3% to 6% of the loan amount and are in addition to any down payment. For illustration: For a $350,000 mortgage, that would be $7,000 to $21,000.

Bingham shared one example of pricing that showed a 40.4% year-over-year increase in the specific cost for a basic tri-merge report, going to $47.05 in 2026 from $33.50 last year for an individual applicant. That amount is on the low end, he said.

Lenders typically pull a borrower’s credit report twice in the home-purchase process — once at application and again just before the loan closes to ensure nothing significant has changed. So, if a lender did a tri-merge report both times, the above amount would be double for an individual, at $94.10, Bingham said. For a couple, it would be quadruple, or $188.20. However, prices vary from lender to lender.

In other words, these prices are grabbing a lot of attention despite being a fraction of what buyers pay for closing costs, not to mention the house itself, said John Ulzheimer, a credit expert and president of The Ulzheimer Group in Atlanta.

“I get it that they want to save [on that expense], but to me that is an immaterial cost when you look at the cost of making a bad decision on a mortgage loan,” Ulzheimer said, adding that three reports provide more information than one.

“I think most risk managers would likely tell you … that they’d never turn away more information to make a decision,” he said.

Part of the problem for lenders is that if a potential homebuyer ends up not finalizing the transaction, the cost of the credit report isn’t passed on to the buyer — which means the lender eats the cost, Bingham said.

The MBA’s December letter to the FHFA outlined its proposal. The group reiterated it in written testimony to a congressional subcommittee at a hearing last week on homeownership and the role of the secondary mortgage market.

It’s uncertain whether the FHFA is considering the proposal for single-report usage. A spokesperson told CNBC in an email that the agency is “studying a variety of options to fix the housing market.”

Of course, there is opposition to the proposal as well. The Consumer Data Industry Association, which represents credit-reporting firms including Equifax, Experian and TransUnion, issued a statement in support of continuing the tri-merge report, saying it promotes data accuracy, market competition and investor confidence.

There’s also a lot of finger-pointing in the industry over why credit report prices have jumped. In its statement, the CDIA said FICO has “steadily increased its pricing year over year.” FICO provides the “classic” FICO credit score, which, until recently, was the only one lenders could use for mortgages sold to Fannie and Freddie. In a blog post, the Mortgage Bankers Association said both the credit-reporting companies and FICO are responsible.

A FICO spokesperson said in an email to CNBC that the company has no control over how its score is priced by other parties, nor the price of credit reports.

FICO said in late 2024 that its 2025 royalty of $4.95 per score for mortgage originations marked FICO’s fourth royalty increase in the mortgage industry since the score was unveiled in 1989, not counting its inflation boosts over the last several years.

The company also launched a direct-to-lender score this year, which would bypass the credit-reporting companies.

Other changes related to mortgages and credit scores are also percolating: The FHFA announced last year that lenders could start using a particular score from VantageScore instead of only the classic FICO score for loans being sold to Fannie and Freddie.

VantageScore is a joint venture among Equifax, Experian and TransUnion. It was created in 2006 as a competitor to the FICO score, which has been around since 1989. Both brands use similar data to compute your number — including things like outstanding debt, payment history and other financial tidbits that help predict whether you’ll repay what you borrow. The most familiar versions of both VantageScore and FICO result in a score that falls on a scale of 300 to 850.

The particular VantageScore that was approved — VantageScore 4.0 — differs from the classic FICO score in several ways, including by considering alternative data such as rent and utility payments when evaluating a consumer’s creditworthiness. 

However, VantageScore 4.0 is not yet deployed.

“While that approval is a significant step, the industry is currently awaiting additional guidance and operational details necessary to implement adoption,” said Dan Smith, CDIA president and CEO.

The FHFA also has approved the use of FICO 10T, a score that also considers alternative data such as patterns in a consumer’s credit usage over at least 24 months instead of just a snapshot in time, but the agency has not yet said that lenders can start using it for loans being sold to Fannie and Freddie.