A mortgage is often a consumer’s largest debt commitment, which translates into considerable risk for mortgage lenders. This is one of several reasons why a tri-merge credit report, which provides a highly detailed analysis of an applicant’s credit history, is preferred by lenders, government sponsored entities, mortgage servicers and the investor community.
Historically, a tri-merge credit report consolidates consumer data collected from nationally recognized data sources into one file, enabling mortgage lenders to quickly identify the potential buying power and eligibility of a loan applicant.
However, the report is being redefined to solve the common yet complex problems that arise during the mortgage loan origination process.
A typical tri-merge credit report includes consumer data from Experian, Equifax, and TransUnion - the “big three” credit bureaus. This consolidated report provides major advantages to lenders and consumers alike:
1. Provides a “point in time” snapshot of an individual’s credit and spending habits from multiple sources that assist financial institutions in evaluating credit worthiness.
2. Increases operational efficiencies by eliminating the need to pull three separate credit reports and then compare them side-by-side.
3. Fills in gaps in a consumer’s credit history as a result of varying degrees of financial account, public record, and identity information reporting.
4. Reconciliation of the most up to date information as reported from consumer credit furnishers via the national credit reporting agencies.
During the past decade, much has changed within the consumer credit arena.
Experian for example, created Experian Boost to serve the 100 million consumers with little or no credit history, or with credit scores under 700. Experian Boost enables these consumers to build credit scores by allowing Experian to record their history of on-time utility and rent payments as proof of responsible financial habits.
The National Consumer Assistance Plan, or NPCA, project was launched to make credit reports more accurate and allow consumers to easily remedy errors on their credit reports. The NCPA was created in response to state Attorney Generals who insisted that their citizens’ credit reports often contained an excess of errors. The changes made in response to the 2015 judgment created, among other things, more accurate credit reports.
Other improvements and additions to the information found within today’s tri-merge reports include:
Generally, these reports are obtained for business-to-business transactions that involve a consumer. They are most commonly used by a mortgage originator or financial institution for making a lending decision and performing pre-closing gap analysis. Additionally, a tri-merge report may be used by lenders during a consumer’s effort to determine product options, or by an organization conducting loan servicing as part of an ongoing analysis of payment trends and activity.
While the purchase and use of tri-merge reports by a consumer is possible, it is more common that they obtain an individual single bureau report directly from a reporting agency. Consumers can view and download their Experian, TransUnion and Equifax reports free of charge at annualcreditreport.com. This site enables consumers to check for errors, which in turn can assist them with initiating a file correction.
According to a 2013 FTC study, one in five consumer credit reports contained material errors. These errors may lower a borrower’s credit score, which can result in, unfair, expensive borrowing rates and loan application disqualifications. While the introduction of the National Consumer Protection Agency has improved these numbers, errors are still occasionally found. A 2021 study found that 29% of consumers found errors in their credit reports' personal information, and 11% found account information errors.
Therefore, if a mortgage loan applicant is working with a broker or a mortgage lender, it may be beneficial to review the tri-merge report together – especially if potential errors are spotted that may affect the applicant’s loan approval.
Unlike the individual bureau’s reports, the tri-merge credit report delivers major advantages to the lender, as it provides the pertinent information to determine creditworthiness. Just as each bureau may have different scoring systems, each lender has specific qualifications and risk levels for approving a mortgage.
Yes. Since this report is only ordered when an applicant is formally applying for a new purchase loan or a refinance, giving permission to a lender to order a tri-merge report is considered a hard inquiry or hard pull. Too many hard pulls authorized in the recent past may negatively impact a borrower’s score.
To protect borrowers’ credit scores, Informative Research offers a preliminary credit product: SoftQual.
No. Even though tri-merge reports contain FICO scores, it's important to note the differences between the three credit bureaus’ credit scoring practices and FICO algorithms. FICO scores are for different types of loans, including credit cards, autos and mortgages, and are generated by a system created by the Fair Isaac Corporation, a national company that debuted its first FICO scores in 1989.
Each bureau (Experian, Equifax, and TransUnion - the "big three" credit bureaus) uses a different scoring model for several reasons:
The different scores can be intimidating for borrowers because three bureaus mean three reports and three different scores, but that's not always the case. Usually, all scores will be similar. You may have also heard of a VantageScore, which is created when the three bureaus agree on a score to assign a consumer. It's important to note for the applicant that if they generally have healthy credit, the reports will reflect it as so.
Mortgage lenders and independent brokers recognize Informative Research as a trusted provider of consumer data. They choose Informative Research to supply TriMerge Credit Reports because they deliver a comprehensive profile of an applicant’s payment history, credit limits, current account status, FICO score and much more.
TriMerge Credit Report customers (lenders, underwriters and brokers) receive the following:
Understanding the importance of accurate tri-merge reports and clearing any misconceptions for borrowers are essential best practices for lenders who require this type of data when screening applicants. However, lenders should not accept the old way of doing things – the report must enable better real time decisions and can help move past the challenges that might prevent borrowers from attaining their dream house.
We have the systems, expertise and knowledge to provide and support lenders who share our commitments to customer service, risk reduction and constantly improving technology.