The conversation around credit reports in mortgage lending has taken a recent turn. Faced with spiraling mortgage origination costs and continued affordability challenges for homebuyers, policymakers and industry leaders understandably are searching for ways to reduce friction and cut costs in the mortgage process. One proposal being advanced is the adoption of a single-bureau credit report for loans delivered to Fannie Mae and Freddie Mac.
At first glance, the idea may seem appealing; fewer bureaus and less data could mean lower upfront costs. Lower costs, in theory, could mean greater access to homeownership. These are worthy goals, and anyone who works closely with first-time homebuyers, minority borrowers, and veterans shares them. I certainly do.
But before we turn theory into policy, we should pause and ask the hard questions.
This debate did not begin yesterday. The cost of credit reports did not suddenly spike in the last six months. The inflection point traces back to late 2022, when the Federal Housing Finance Agency (FHFA) first proposed the adoption of a two-bureau “bi-merge” credit report alongside new scoring models.
Shortly after that announcement, credit score prices increased by 400%, but for a small subset of large institutions that were granted preferential pricing. This is what happens when there is no real competition.
And this is where our focus should be – on the cause of our problems (lack of competition) – not on mitigating the damage for a slice of the mortgage market that is geared more towards refis and high FICO borrowers than on first-time homebuyers.
The first question we should ask is simple: what data are we willing to ignore? Each of the three national credit bureaus receives different information from different furnishers. This is not a flaw; it is a structural reality of the credit ecosystem. In any given borrower’s file, certain trade lines appear on two bureaus but not the third. Student loans, installment debt, revolving accounts, and even late payments are not always uniformly reported.
Under a single-bureau regime, which bureau controls the credit decision? More importantly, who chooses it? If borrowers or lenders can select the bureau that produces the most favorable snapshot, we are no longer measuring creditworthiness—we are curating it. That introduces subjectivity, risk, and uncertainty into a system that should be designed to reduce those factors.
Ask yourself a question: if using only one credit report is such a great idea, why are so few portfolio lenders – who have their own money at risk – using this approach?
We have seen this movie before. In the years leading up to the Great Financial Crisis, the industry relied too heavily on narrow indicators while ignoring the totality of a borrower’s financial profile, such as ability to repay.
The resulting mortgage meltdown taught us we must not care less about the GSEs just because taxpayers – and not lenders – are on the hook for loan losses. Lenders should not be lulled into a false sense of security just because Fannie and Freddie are buying the loans, since repurchases could result when a single bureau fails to flag detrimental information on a borrower.
The second question we should ask concerns risk measurement. How do we quantify the incremental risk introduced when known data are intentionally excluded from underwriting?
We do have one early objective indication of the impact. Just recently, a Housing Policy Council (HPC) FOIA release revealed an analysis by the FHFA that “a single file report showed a decrease in reliability in predicting borrower performance.”
But the honest answer is that we cannot easily quantify the increased risk resulting from the uncertainty of limiting information on a borrower’s credit record. And that alone carries a premium. Investors will demand it. MBS traders will price it. And MSR valuations will reflect it. And rate sheets will feel it.
So, even if a borrower saves a small amount of money by accepting a less comprehensive credit report, that savings will likely be overwhelmed by higher mortgage rates quoted by aggregators, or by higher fees charged by mortgage insurers (MIs), or by higher LLPAs charged by Fannie and Freddie, or by reduced liquidity in the secondary market.
That brings us to a third, often-overlooked question: who benefits the most from this single-bureau model proposal? The answer is simple: well-heeled borrowers seeking to refinance their loans.
Underserved homebuyers, who predominately use FHA, VA, and USDA loans, will receive no benefit if as likely, those programs do not follow suit. These borrowers would even be harmed if their lenders are incentivized not to explore such loans, because that would increase credit pull costs.
Finally, there is a broader, strategic consideration that deserves serious attention.
The Trump Administration wants to take Fannie Mae and Freddie Mac out of conservatorship, whether through reprivatization, an IPO, or some other capital-markets solution. Any such path depends on investor confidence in the GSEs’ risk management, data integrity, and underwriting discipline.
Introducing a structural change that embeds unquantifiable credit risk into the core of the GSE business model does not strengthen that confidence—it undermines it.
This does not mean we should do nothing. Credit report costs are too high. Market concentration is real. Pricing opacity is a problem. These issues demand action.
But there are better levers to pull – like restoring competition in credit scoring, reexamining pricing practices, cutting LLPAs that disproportionately burden first-time buyers, and other reforms that reduce cost without sacrificing data quality and safe lending.
Affordability matters. But safety and soundness matter just as much. We should not – and do not have to – choose between them. But we do have to ask the right questions.
When it comes to a single credit bureau pull proposal, we must look before we leap.
Taylor Stork, CMB is President of the Community Home Lenders of America (CHLA), and is Chief Operating Officer of Developer’s Mortgage Company
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: [email protected].
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