Rising credit report costs may push mortgage industry toward upfront fees

Kevin Bell, a mortgage broker at Oakmont Lending, had to adjust to a different approach to handling credit report costs when he joined the company from a retail lender earlier this year.

Oakmont charges borrowers upfront, while Stockton Mortgage Corp., where Bell worked for about three years as a branch manager, follows the industry standard of charging the fee at closing.

“I enjoyed pulling credit no matter what and not having to worry about it,” Bell said in an interview with HousingWire. “Obviously, when you run a branch, you pay for every credit pull, and if you don’t have closed loans, you go up in costs. But everybody has to stay in business, so it doesn’t make sense to have an extraordinary cost that essentially will bring costs up on every single borrower.”

As a result, while other retail lenders charge about $300 per closed loan for credit report costs, Oakmont charges about $95, depending on the credit pull, according to Bell.

Instead of pulling credit for every applicant, Oakmont relies on application and publicly available data to work with borrowers on improving their credit scores before incurring costs. The upfront fee can also be waived if a client cannot afford it and is serious about obtaining a mortgage, in which case the cost can be added to the back end at closing. The same applies when loan officers need to move a deal quickly.

According to industry experts, this approach is gaining traction as credit report costs continue to rise for mortgage lenders. Resellers have indicated that prices will jump another 50% in 2026, marking the fourth consecutive year of increases.

The higher costs stem from reports that originate with FICO data and are delivered through the three major credit bureaus — Experian, Equifax and TransUnion. Resellers are not yet offering the new direct program that FICO launched in October. And VantageScore 4.0, approved for use by Fannie Mae and Freddie Mac, is not yet operational.

A market trend?

Mortgage brokers are increasingly likely to charge borrowers upfront for credit report costs, while many retail lenders remain hesitant because their competitors aren’t doing the same, according to Don Clement, assistant vice president of strategic partnerships at CIC Credit.

“However, that may be changing with this increase,” Clement said. “If everyone went back to this model, it would make lenders’ lives so easy.” 

John Wines, chief strategy officer at Atlantic Bay Mortgage, said his company is focusing on elements it can control — such as lowering costs to consumers by adopting new models. “If we assess the risk more accurately, we believe that will lead to fairer pricing,” he said.

Wines added that credit report prices at Atlantic Bay have been rising 30% to 40% every year, and although the company hasn’t received its official pricing for 2026, it already expects another increase. 

“We charge the credit score cost at the closing, so if a borrower applies and doesn’t close, we’re not charging them today,” Wines said. “It reduces friction upfront. Borrowers are looking all around for a mortgage; they’re trying to find the best mortgage for their particular needs, and we don’t want them to feel like they have to pay money to find out what their options are.”

Atlantic Bay uses soft-pull reports when borrowers begin their mortgage journey, then moves to a tri-merge model when the customer is ready and comfortable with the process.

Skin in the game

Xactus President Shelley Leonard said that lenders exploring upfront fee collection are assessing whether it could put them at a competitive disadvantage.

“We have had some lenders that have been testing it, but we have also some lenders that use it today. And my assumption is, going into 2026, they’ll continue,” Leonard said. “It’s about checking to see if the consumer is really serious, giving lenders indication that they’ve got skin in the game.” 

According to Leonard, some lenders are starting by ordering a report from only one bureau, then ordering reports from the remaining bureaus later in the underwriting process to produce a tri-merge report once they have more certainty about the borrower.

This strategy depends heavily on fallout rates and is used selectively. If the applicant is on the borderline of qualification, then the second or third report will be ordered sooner rather than later, she said.

Brendan McKay, chief advocacy officer at the Broker Action Coalition and owner of McKay Mortgage, said he does not charge borrowers upfront for credit reports.

“But it feels like I’m becoming one of the last holdouts,” he added. “We start with a two-bureau soft pull at preapproval and don’t run a hard pull until the buyer is under contract.”

According to McKay, credit reports are the only closing cost charged before a buyer is approved — and it’s often charged multiple times. The cost could reach $360 if a borrower shops three lenders, which is recommended when making one of the biggest financial decisions of their lives, he said. 

“Buyers should have control of their credit report. There is no reason that they can’t pull and pay for their own credit report, and allow multiple lenders to securely import the same report,” McKay said.