Traditionally, mortgage lenders have ordered credit information from the major 3 credit bureaus: TransUnion, Equifax, and Experian. This type of report is called a tri-merge credit report due to the 3 types of data inputs. However, some lenders have transitioned to bi-merge credit reports instead of the tri-merge credit report, which relies on only 2 of the 3 bureaus. In some cases, lenders have even considered only going by a single credit report to make their decisions. Unfortunately, this has caused some complicated problems, which are contributing to the need for some pushback on this new behavior within the lending industry.
Since lenders are only using 2 lenders, there is a fair chance that 2 different lenders will utilize 2 different credit bureaus when ordering information. Therefore, the same applicant can be evaluated at a different level of risk depending on which vendor they go to. If bi-merge credit reports are more widespread, this flaw enables individuals to check their credit score across different lenders and get prices they may not be eligible for. Not only could information be missing, but it could be wildly inaccurate as well. It is estimated that almost 1 in 5 consumers saw a score difference of 20 points or more. This makes relying on bi-merge credit even more difficult as a mortgage lender. Additionally, these issues are even more dire if the lender is utilizing just one credit pull.
Ultimately, pricing a mortgage requires accurate information to properly price. To avoid a situation where mortgage lenders miss out on key information, keeping tri-merge credit reports must be maintained as the status quo.
Source: Equifax
