In the world of mortgages, knowing who you’re doing business with is vital. For this reason, lenders often turn to credit bureaus to get a better financial picture of mortgage applicants. The 3 major credit bureaus that help mortgage lenders are Equifax, Experian, and TransUnion, Traditionally, lenders have relied upon reports from all 3 credit bureaus. This is called a tri-merge credit report. However, some lenders are trying to utilize only 2 of the credit bureaus rather than 3. So, what exactly is the difference?
While missing 1 of 3 credit bureaus can seem small, it is estimated that over one-third of applicants see a difference in their credit score of 10 points or more. For 18% of consumers, this change was seen as 20 points or more. In practice, this difference equates to consumers falling into an incorrect ‘pricing bucket,’ meaning customers are improperly charged for their loan. Furthermore, missing information from a bureau can mean that a major factor of someone’s financial history is not factored into the price. Ultimately, lending out mortgages is a precise endeavor that requires a complete financial picture. If lenders want to ensure they are giving out properly priced loans to the right people, relying upon tri-merge credit reports is the only way to go.
Source: Equifax