Rising Credit Check Fees Add to Homebuying Costs
Homebuyers are facing increased costs for credit checks as part of their closing expenses, sparking debate within the mortgage industry. While these fees represent a small percentage of overall closing costs, they have risen sharply in recent years, and are projected to continue increasing.
The Rising Cost of Credit Reports
According to a December 12, 2026, letter from the Mortgage Bankers Association (MBA) to Federal Housing Finance Authority (FHFA) Director Bill Pulte, credit check costs could rise an average of 40% to 50% in 2026. The MBA has asked the FHFA to allow lenders to use a single credit report – known as a “tri-merge” report – for borrowers with a credit score of 700 or higher. Currently, lenders typically pull a borrower’s credit report twice during the home-purchase process: once at application and again before closing.
Current Requirements and Average Credit Scores
Most lenders require a minimum credit score of 620. However, Fannie Mae, a government-sponsored enterprise, announced in November 2026 that applications processed through its automated underwriting system would no longer require a minimum score. Despite this change, most homebuyers have higher credit scores. In 2024, the average credit score for first-time homebuyers was 734, and for repeat buyers, it was 775, according to the Federal Reserve Bank of Latest York.
The Impact of Tri-Merge Reports
Lenders selling mortgages to Fannie Mae and Freddie Mac – the largest purchasers of mortgages on the secondary market – are currently required to use a tri-merge report, which gathers credit scores and reports from Equifax, Experian, and TransUnion. Al Bingham, a loan officer with Momentum Loans in Sandy, Utah, stated, “The cost of the requirement to have a tri-merge report has gone up exponentially. It’s nuts.”
Closing Costs Breakdown
Closing costs typically range from 3% to 6% of the loan amount, in addition to any down payment. For a $350,000 mortgage, this translates to $7,000 to $21,000. Bingham provided an example showing a 40.4% year-over-year increase in the cost of a basic tri-merge report, rising to $47.05 in 2026 from $33.50 the previous year. This cost can double for an individual applicant and quadruple for a couple.
Industry Debate and Responsibility
Despite being a small fraction of total closing costs, the rising fees are drawing attention. John Ulzheimer, a credit expert and president of The Ulzheimer Group in Atlanta, argued that the cost is “an immaterial cost when you appear at the cost of making a bad decision on a mortgage loan,” and that three reports provide more information than one. The Consumer Data Industry Association (CDIA), representing Equifax, Experian, and TransUnion, supports continuing the tri-merge report to promote data accuracy and investor confidence.
There is disagreement over the cause of the price increases. The CDIA points to pricing increases by FICO, while the MBA suggests both credit-reporting companies and FICO are responsible. FICO maintains it does not control how its score is priced by others. FICO increased its royalty for mortgage originations to $4.95 per score in late 2024, marking its fourth increase since 1989.
Alternative Scoring Models
The FHFA has approved the use of VantageScore 4.0 as an alternative to the classic FICO score for loans sold to Fannie and Freddie. VantageScore 4.0 considers alternative data, such as rent and utility payments, when evaluating creditworthiness. However, the industry is awaiting further guidance on implementation. The FHFA has similarly approved FICO 10T, which considers patterns in credit usage over time, but has not yet authorized its use for loans sold to Fannie and Freddie.
FHFA Review
The FHFA is currently “studying a variety of options to fix the housing market,” according to a spokesperson, but it remains uncertain whether the agency will adopt the MBA’s proposal for single-report usage.