Credit Reporting Overhaul Could Raise Costs and Limit Consumer Recourse

Credit reporting costs for most mortgages have risen by as much as 350% in recent years, with those increases passed directly to borrowers through higher closing costs. The Mortgage Bankers Association attributes this surge in part to the requirement that lenders obtain credit reports from all three major bureaus — Experian, TransUnion, and Equifax — for most mortgages backed by Fannie Mae and Freddie Mac.

The House Financial Services Subcommittee on Financial Institutions is considering Republican-backed bills that would amend the Fair Credit Reporting Act (FCRA) and cap liability in credit reporting lawsuits. Industry representatives argue that the current liability framework discourages the reporting of alternative data like rent and utility payments, reducing competition and innovation.

The Mortgage Bankers Association has called for removing the tri-merge requirement, which mandates reports from all three bureaus for most mortgages. The group says this change would lower costs, increase competition, and improve access to homeownership without adding risk. It also notes that single-file credit reports are already used in other consumer lending markets.

Consumer advocates, however, warn that the proposed reforms would reduce accountability for credit reporting errors and limit consumers’ ability to seek relief. They argue that capping liability and limiting access to legal recourse would disproportionately harm vulnerable borrowers, particularly those who rely on the current system to correct inaccuracies in their credit files.