The Real Cost of Credit Reports: Unpacking Data, Competition, and Mortgage Policy

Highlights: 

• The primary financial challenge is unrecouped loan fallout, not credit report price. Lenders absorb an estimated $100 million to $250 million annually in credit report fees from approximately 1.9 million mortgage applications that don't close, a much larger burden than the individual report cost.

• A shift to single-bureau reporting poses a significant risk to the capital markets and consumers. Eliminating the tri-merge requirement could lead to lenders "gaming the system," causing global investors to raise mortgage-backed security prices, which would translate to a higher interest rate for the borrower.

The mortgage industry is navigating a critical juncture, with intense conversations around the true cost of credit reporting and the future of loan manufacturing. The evolving landscape of policy, from potential changes to the tri-merge requirement to the entry of VantageScore, has led to much speculation.

At MBA Annual 2025, I was joined on a special edition of the Equifax Market Pulse podcast by Dr. Amy Crews Cutts, President and Chief Economist at AC Cutts & Associates. Dr. Cutts shared key findings from her new study, providing a data-driven picture of the costs and competitive dynamics of mortgage credit reports. Her insights make it clear that while debate often focuses on the price of a report, the real challenge lies in systemic costs like fallout and the long-term risk of compromising predictive power for short-term savings.

Here are the key takeaways from our discussion on the future of mortgage credit reporting:

1. The True Cost Challenge is Unrecouped Fallout, Not Report Price

While a single-borrower tri-merge report's cost is a small fraction of overall loan costs (ranging from $40 to $240), the real financial burden for lenders is the unrecouped cost of loan applications that never close (fallout). According to Home Mortgage Disclosure Act (HMDA) data, approximately 1.9 million of 5 million mortgage applications in 2023 and 2024 did not close. Because many lenders choose not to charge the borrower upfront, this fallout represents an estimated $100 million to $250 million in absorbed credit report fees annually.

2. Competition Among Resellers is Robust and Drives Down Costs

The tri-merge credit report market is highly competitive, with Fannie Mae listing around 47 approved resellers. This competition ensures a low cost differential, and large-volume lenders have significant negotiation leverage for bulk discounts. Importantly, under the Real Estate Settlements Procedures Act (RESPA), any cost saving secured by a lender must be passed directly to the borrower on the final closing document, ensuring that competition and resulting savings directly benefits the consumer on closed loans.

3. Moving to Single-Bureau Reporting Presents Major Risks and Consumer Costs

Dr. Cutts’s research clearly shows that eliminating the tri-merge requirement in favor of a single-bureau pull poses a significant risk to the integrity of the capital markets. Lenders who shop for the highest of three scores (a 20 to 40-point differential is possible between the bureaus) would be "gaming the system." Global investors, including the GSEs, would recognize this artificial score jump and respond by raising the price of the mortgage-backed security. This would translate to a higher interest rate for the borrower (potentially an eighth to a quarter of a point), costing them significantly more over the life of the loan than the small savings on the initial credit report.

4. Strategic Process Adjustments Can Cut Fallout Rates

The high fallout rate, which is a major pain point for the industry, can be dramatically reduced through process and transparency. Lenders can use tools like soft-pull credit checks and closing cost calculators early on to have a frank discussion with the borrower about all expenses, from closing costs to rising insurance and taxes. Furthermore, analysis shows that refinance loans have significantly lower fallout rates than first-time home purchases, as refinance borrowers are more experienced. Leveraging analytics to reach out to portfolio customers at opportune times remains a key strategy for reducing fallout and driving success.

At Equifax, we continue to believe that competition, transparency, and the incorporation of more predictive data, like income and employment information, are the keys to a healthier, more inclusive, and more efficient mortgage market. By focusing on smart, data-driven strategies, we can reduce lender costs without inadvertently burdening the American homebuyer.

Listen to the Full Conversation Here.

The podcast was recorded on October 20, 2025, at MBA Annual 2025 in Las Vegas, Nevada.

The conversation was hosted by Emmaline Aliff of Equifax and featured Amy Crews Cutts of AC Cutts & Associates.