Rising Credit Check Fees Add to Homebuying Costs – and Industry Clash

Rising Credit Report Costs Add to Homebuying Burden

A seemingly small, but rapidly increasing, line item in homebuyers’ closing costs – the fee lenders pay to check borrowers’ credit – is sparking debate within the mortgage industry. While these charges typically fall in the tens or hundreds of dollars, representing a small fraction of overall closing expenses, costs are climbing sharply. Estimates suggest a potential 40% to 50% increase in 2026, according to a December letter from the Mortgage Bankers Association (MBA) to Federal Housing Finance Authority (FHFA) Director Bill Pulte. The MBA has asked the FHFA to consider allowing lenders to rely on a single credit report, rather than the standard “tri-merge” report from all three major credit bureaus, for borrowers with credit scores of 700 or higher.

The debate comes as the housing market continues to grapple with affordability challenges. While Fannie Mae, a government-sponsored enterprise, announced in November that it would no longer require a minimum credit score for applications processed through its automated underwriting system, most lenders still maintain a minimum requirement of 620 (on a scale of 300 to 850). However, the average credit score of homebuyers is significantly higher, meaning many would benefit from a reduction in these credit report fees.

Average Credit Scores Remain High

Data from the Federal Reserve Bank of New York shows that the average credit score for first-time homebuyers was 734 in 2024, while repeat buyers averaged 775. This suggests a large segment of the market could potentially see savings if the FHFA adopts the MBA’s proposal.

The Tri-Merge System and Rising Costs

Currently, lenders seeking to sell mortgages to Fannie Mae and Freddie Mac – a practice most lenders follow to ensure a steady supply of capital – are required to utilize a tri-merge credit report. This report compiles information from Equifax , Experian and TransUnion . Al Bingham, a loan officer with Momentum Loans in Sandy, Utah, described the cost increase as “nuts,” noting the exponential rise in tri-merge report fees.

Bingham shared an example of a 40.4% year-over-year increase, with the cost of a basic tri-merge report rising to $47.05 in 2026 from $33.50 the previous year. Lenders typically pull credit reports twice during the home-buying process – once at application and again before closing – potentially doubling the cost for an individual applicant and quadrupling it for a couple. Pricing varies between lenders, but the trend is undeniably upward.

Closing Costs: A Broader Perspective

While these credit report fees are attracting attention, they represent only a portion of the overall closing costs associated with a home purchase. Closing costs generally range from 3% to 6% of the loan amount, encompassing loan origination and underwriting fees, agent commissions, appraisals, and inspections. For a $350,000 mortgage, this translates to $10,500 to $21,000 in addition to any down payment.

The Role of FICO and VantageScore

The rising costs aren’t solely attributable to the tri-merge requirement. The Consumer Data Industry Association (CDIA) points to increasing pricing from FICO, the provider of the widely used “classic” FICO credit score. FICO recently implemented its fourth royalty increase since 1989, alongside inflation-based adjustments. The Mortgage Bankers Association, however, suggests both the credit reporting companies and FICO share responsibility for the price hikes.

FICO has responded by launching a direct-to-lender scoring option, bypassing the credit reporting agencies. The FHFA has approved the use of VantageScore 4.0, a competitor to FICO, which incorporates alternative data like rent and utility payments into its creditworthiness assessment. However, VantageScore 4.0 is not yet widely implemented, awaiting further guidance and operational details.

Data Accuracy vs. Cost Savings: A Core Debate

The debate centers on a trade-off between data accuracy and cost savings. Proponents of the tri-merge report, like credit expert John Ulzheimer, argue that three reports provide a more comprehensive view of a borrower’s credit history, reducing risk for lenders. “I get it that they aim for to save [on that expense], but to me that is an immaterial cost when you look at the cost of making a lousy decision on a mortgage loan,” Ulzheimer said. He added that risk managers generally prefer more information when making lending decisions.

A key concern for lenders is the cost of credit reports for applications that ultimately don’t close. In these cases, the lender absorbs the cost of the report, creating a financial disincentive.

FHFA’s Options and Next Steps

The MBA’s December letter to the FHFA outlined its proposal for allowing single-report usage for borrowers with credit scores of 700 or higher, a point reiterated in testimony before a congressional subcommittee last week.

The FHFA has acknowledged the issue and stated it is “studying a variety of options to fix the housing market,” but has not yet indicated whether it will adopt the MBA’s proposal. The agency’s decision will likely have a significant impact on closing costs for homebuyers and the financial burden on lenders. The industry will be watching for further guidance from the FHFA in the coming months, as well as the pace of adoption for VantageScore 4.0 and FICO’s direct-to-lender scoring option.