Q&A: Why Do Mortgage Loan Applications Require All Three Credit Reports?

Q: I’m in the process of applying for a mortgage loan and my bank pulled all three of my credit reports. Why do home loans require all three credit reports instead of just one?

A: It’s a bit funny when people talk about their “three credit reports.” When finance experts and consumers reference these three numbers, they are referring to the credit scores generated by the three major credit bureaus: Experian, Equifax and TransUnion. However, you actually have many more credit scores than just three, and they’re all calculated in different ways.

With that said, though, it’s likely your mortgage lender will examine the three most common sources of credit reports and subsequent scores — and if you’re applying for a loan jointly, your partner’s three reports and scores will be pulled as well. This is a bit different than applying for say, an auto loan or credit card, when usually just one credit report and score is sufficient. That’s because a mortgage is a much bigger and more complicated type of loan than any other.

According to credit expert John Ulzheimer, the lender will probably pull a Residential Mortgage Credit Report (RMCR), also commonly referred to as a “Tri-Merge” report, which combines all three credit reports and scores into one file for each applicant.

So why, again, does the lender need to pull all three credit reports? As mentioned, a mortgage loan is kind of a big deal! Mortgage lenders need to have an accurate picture of what type of borrower you are, ensuring there hasn’t been any risky credit behavior in the past that may indicate you are not a reliable borrower. Each of the three scores will be different, and mortgage lenders can evaluate the range and average to decide if your application should be approved.