While the mortgage industry lobbies to reduce credit report costs, the idea of allowing borrowers to use the same file across multiple lenders has slowly emerged.

In this consumer-controlled portable credit report model, borrowers would authorize the use of a single credit report during their mortgage search across different lenders. The concept mirrors tenant screening reports — a reusable, renter-obtained background check shared with multiple landlords, often within a 30-day period.

Mortgage industry proponents say the change would reduce the need for lenders to pull credit reports that ultimately fail to result in closed loan originations while also empowering customers. Credit reporting industry representatives, however, view the model as an open door for fraud and have showed skepticism from the start. 

The Broker Action Coalition (BAC) noted in a February letter to the Federal Housing Finance Agency (FHFA) that consumers have their credit pulled an average of 2.5 times when getting a mortgage. Reducing this to a single pull would effectively lower the aggregate cost of credit reports from roughly $150 to $60 for the consumer, the group said.

“I don’t think it solves all of our problems; it’s more than a Band-Aid solution, though,” Brendan McKay, president of advocacy at the BAC, said in an interview with HousingWire.

“Right now, if a consumer comes to me and says, ‘Hey, I want to get preapproved, but I just had my credit pulled by a lender down the street. Can you just use that credit report I paid for?’ the answer is no, and for no good reason. Either I have to pay $150, or they have to pay $150, to pull a report with the exact same information on it.”

Under the proposal, a borrower would pull and pay for their own credit report, then distribute it with multiple mortgage companies by sharing a credit reference number, McKay said. Lenders would then import the credit report directly into their systems.

“It’s not going to drive down the cost of credit, but it will reduce the number of credit reports that are pulled wastefully,” McKay said. He added that his broker shop spends $30,000 a year on credit reports for mortgages that don’t close.

Under the Fair Credit Reporting Act (FCRA), lenders can currently share borrower credit reports with third parties like investors only if they have a permissible purpose. Lenders often incur additional “secondary use” fees from credit bureaus for each party that accesses the report. They frequently pass these costs to the borrower as part of the application or origination fees.

“When lenders began to reissue a credit report to various lenders through Fannie Mae and the Federal Housing Administration, the reissue fees were put in place,” an executive in the credit reporting industry said. “The bureaus also must post a hard inquiry to every lender whose report is shared. Clearly, they are not going to do that without a revenue game.”

Current context

The portable credit report concept recently emerged when the Consumer Financial Protection Bureau (CFPB), under former Director Rohit Chopra, debated the Personal Financial Data Rights Rule. The rule established an open banking framework, but the bureau vacated it last year. 

Mortgage professionals view the model as an interesting idea but argue it lacks sufficient research and faces a difficult context, making it hard to support. 

“My overarching concern is that adding a new variable into the mix with credit reports, when we are already beginning to explore other variables, could start to become destabilizing for the housing market,” said Taylor Stork, president of the Community Home Lenders of America. “The industry in general needs to figure out how the impact of VantageScore 4.0 and FICO 10T hits the rate sheets.”

There are also questions about operational challenges — for example, how sharing the information with multiple lender would affect credit scores.

“Portable credit reports are a novel and compelling idea with clear potential benefits for the consumer experience,” Stork said. “At the same time, we need more clarity on key operational and risk considerations. For example, the process today includes verifying inquiries to ensure the borrower hasn’t opened new credit across multiple lenders.

“As we evaluate a portable model, a concern might be how those safeguards would work. With that clarity, the industry can better assess the concept.”

Eric Ellman, president of the National Consumer Reporting Association (NCRA), raised concerns about fraud.

“We are obviously very focused on fraud prevention; artificial intelligence and other technology are making it so much harder to fight fraud — and conversely, making it so much easier to commit and perpetuate fraud — that anything that has the capacity to inject more fraud into the system is going to be a significant problem,” Ellman said.

For McKay, portable credit reports would remove a significant financial barrier for consumers facing a challenging path to homeownership. Borrowers are more likely to persist rather than exit the process prematurely when each additional attempt no longer requires another $150 simply to assess eligibility.

“It is time to give consumers meaningful control over their credit reports,” he said.