A recent CNBC report revealed that the cost for lenders to examine borrowers’ credit is one line item in homebuyers’ closing expenses that is causing conflict within the mortgage market for many current homeowners aspiring buyers. This may pose another significant financial hurdle for those looking to attain the American Dream and find their forever home.
Even while the fees, which are usually in the tens or hundreds of dollars, are a very little portion of what buyers really spend when they buy a house, the price has increased significantly in recent years. The Mortgage Bankers Association (MBA) wrote to Bill Pulte, the director of the Federal Housing Finance Agency (FHFA), on December 12 that costs could increase by an average of 40% to 50% in 2026.
According to the article, for borrowers with a credit score of 700 or above, the trade organization requested that the FHFA allow mortgage lenders to use a single credit report rather than three, or a “tri-merge” report.
Examining Homebuyer Credit Scores & Closing Costs
Although lenders have historically demanded a minimum credit score of 620 (on a typical scale of 300 to 850), government-sponsored enterprise (GSE) and notable mortgage buyer Fannie Mae announced in November that it would no longer require a minimum score for applications submitted through its automated underwriting system.
However, the majority of homebuyers stand to gain from such a move because they have higher credit scores. In 2024, the Federal Reserve Bank of New York reported that the average credit score for a first-time purchaser was 734. The average score for recurring customers was 775.
“The cost of the requirement to have a tri-merge report has gone up exponentially,” said Al Bingham, Loan Officer at Momentum Loans in Sandy, Utah. “It’s nuts.”
Naturally, credit reporting fees are just one of many costs that have increased recently, both in the property market and in the economy as a whole. Additionally, when homeowners settle on their loan, the growing costs they incur for credit reports and scores may be overlooked in favor of considerably higher figures.
Other closing costs that buyers must pay include agency commissions, prices for a house assessment or inspection, and loan origination and underwriting fees. These expenses are on top of any down payment and typically total between 3% and 6% of the loan amount. on example, that would be between $7,000 and $21,000 on a $350,000 mortgage.
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—with that amount being on the low end, he said.
In order to be sure nothing important has changed, lenders usually check a borrower’s credit report twice during the home-buying process: once during the application process and again right before the loan closes. According to Bingham, the aforesaid sum would double for an individual, at $94.10, if a lender performed a tri-merge report twice. It would be triple, or $188.20, for a couple. Prices, however, differ depending on the lender.
According to credit expert John Ulzheimer, President of The Ulzheimer Group in Atlanta, these prices are drawing a lot of attention even though they constitute a small portion of what buyers pay for closing expenses, not to mention the house itself.
“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. “I think most risk managers would likely tell you … that they’d never turn away more information to make a decision.”
The cost of the credit report isn’t passed on to the buyer if the prospective homeowner decides not to complete the transaction, which means the lender bears the expense, according to Bingham. This is one of the main aspects of issues lenders face.
Exploring More Credit Check Options
The MBA presented their suggestion to the FHFA in a letter dated in December. During a hearing last week on homeownership and the function of the secondary mortgage market, the group restated it in written evidence to a congressional subcommittee.
It’s unclear if the FHFA is taking the single-report usage idea into consideration. The government is “studying a variety of options to fix the housing market,” according to a spokesman who emailed CNBC.
Of course, the proposal is not without opposition. In a statement endorsing the continuation of the tri-merge report, the Consumer Data Industry Association, which represents credit-reporting companies including Equifax, Experian, and TransUnion, claimed that it fosters investor trust, market competition, and data accuracy.
In the industry as a whole, there is also a lot of finger-pointing over the reasons behind the increase in credit report rates. FICO has “steadily increased its pricing year over year,” according to the CDIA’s statement. For mortgages sold to Fannie and Freddie, lenders could only utilize the “classic” FICO credit score, which is provided by FICO. The Mortgage Bankers Association stated in a blog post that FICO and the credit-reporting agencies are both accountable.
In an email to CNBC, a FICO representative stated that the business has no influence over the cost of credit reports or how other parties determine the score. In late 2024, FICO announced that, excluding inflation rises over the previous few years, the 2025 royalty of $4.95 per score for mortgage originations was the company’s fourth royalty increase in the mortgage business since the score was first introduced in 1989. This year, the business also introduced a direct-to-lender score that would avoid using credit-reporting agencies.
The FHFA reported last year that lenders might begin utilizing a specific VantageScore score rather than just the traditional FICO score for loans being sold to Fannie and Freddie, among other changes affecting mortgages and credit scores.
When determining a consumer’s creditworthiness, the approved VantageScore 4.0 deviates from the traditional FICO score in a number of ways, including by taking into account additional information like rent and utility payments. However, VantageScore 4.0 hasn’t been implemented just yet.
“While that approval is a significant step, the industry is currently awaiting additional guidance and operational details necessary to implement adoption,” said Dan Smith, President and CEO of CDIA.
The post Why Mortgage Credit Checks Are Costing U.S. Homebuyers More first appeared on The MortgagePoint.
