Why Do Lenders Charge For Credit Reports

Great question! When you review your loan estimate and closing disclosure, you’ll see a charge for the credit report listed under "Services Borrower Did Not Shop For" (Box B). These are costs tied to services provided by third parties, and they’re billed to you at the exact amount the provider charges. While you can’t choose the credit report provider, just like with the appraisal, the good news is that if you pay for it before closing, the cost will be deducted from your cash due at closing.

Now, you may be wondering, why has this cost gone up so much recently? Well, credit report fees have surged by as much as 400% since 2022. This is because mortgages are typically based on the middle of three credit scores, and to get those, lenders pull a “tri-merge” credit report. This report gathers data from all three major credit bureaus—Equifax, Experian, and TransUnion—and it’s powered by FICO, the Fair Isaac Corporation. Right now, FICO has a monopoly on mortgage credit scoring, and they’ve significantly raised their fees.

Even if the lender doesn’t charge you for the credit report up front, we still pay for it. Here’s the thing: On average, only about 10% of credit reports lead to closed loans. So for those that don’t close, lenders are still footing the bill for credit reports—and those costs get passed on to borrowers who do close their loans. As former CFPB director Rohit Chopra put it, borrowers who close on loans are often unknowingly helping cover costs for applicants who don’t.

Ever wonder what that “Origination Fee” really covers? Now you know—and it’s exactly why we don’t charge you one.

At our company, we focus on giving you the best possible terms by keeping our overhead low and cutting out unnecessary corporate costs. We don’t have fancy offices, unnecessary middle managers, or huge advertising budgets. We’d rather pass the savings on to you. That means, we don’t want you paying for credit reports from people who don’t close their loans. By paying for your report up front, you save hundreds at closing.

“But What If I Don’t Want to Pay for My Credit Report Right Now?”

We get it! Maybe you're just starting to think about buying next year, or you’re shopping around between lenders. Maybe you're looking for a very specific type of property that’s hard to find. No worries, we have options!

If you’re not ready to move forward, we can offer free credit pulls with some of our investors. This means you won’t pay for a credit report unless you decide to move forward with a lender after you're under contract. Or, if you’ve already pulled your credit report from www.annualcreditreport.com—you can access a free report once a year—we’re happy to review it and give you a rate quote based on the score you already have.

Let’s make sure you’re in the best possible position for homeownership, without any unnecessary costs!