Effective January 2007, Equifax and Experian will increase the cost of obtaining consumer credit reports to lenders. Currently, when you apply for a mortgage loan, the loan originator pulls a tri-merge credit report and, depending on the type of mortgage company the L.O. is employed by, may "shop" for lenders to find the best product and rate. If a borrower has good to excellent credit, often times, looking for rates and products can be done verbally without having to provide a copy of the credit report until the loan is ready to be underwritten.
For borrowers with challenging credit or situations that need mortgage help, loan originators will often times shop different sub-prime lenders for their clients. This may involve running the loan scenario with that sub-prime lender and uploading the client’s credit report. Currently, the original credit report that was pulled by the loan officer is "reissued" to the sub-prime lender for use in underwriting the loan at no additional expense to the consumer. If the loan is especially tricky, it’s very possible to have to repeat this procedure with different sub-prime lenders to try to find a desirable loan approval. Equifax and Experian are now going to charge a fee every time the credit report is submitted to a new lender (sub-prime or not).
This will not only impact "sub-prime" borrowers. I offer to re-lock my clients with another lender should interest rates improve significantly. In this case, there will be additional fees, that do exist now, for reissuing of the credit reports.
Once again, the credit bureaus…well, at least two of them, are playing dirty pool. There is no benefit to lenders or to consumers for the increase in the credit reporting fees. It only generates significant additional revenue for Equifax and Experian and will hurt consumers who can afford the increased cost the least.
Any consumer can obtain a free copy of their credit report by visiting www.annualcreditreport.com. This tool is for the consumers information only, it is not suitable for underwriting mortgage loans.
This is offered by the three major credit bureaus and you are allowed to obtain one report from each bureau per year. I recommend that you pull one report from one bureau every four months until you have cycled through each credit bureau and then start over with the process. There are many copy cat "free credit report" sites, this is the official one. If you receive my Newsletter, which happens to be mailed 3 times per year, you could use the reminder I have featured in it. If you would like to be added to my mailing list, including my Homes & Money Newsletter, please contact me with your mailing address.