The Truths About Tri-Merge
Purchasing a home is one of the key pillars of the American Dream, a notion often brought up in today’s discussions on housing affordability. Yet one facet of securing a mortgage is often misconstrued: credit reporting.
Credit reporting plays a key role in the mortgage-lending system, determining loan eligibility, interest rates, and potentially saving families hundreds of thousands over the life of a loan.
Lately, proposals aimed at replacing the long-standing tri-merge credit reporting system have been portrayed as a way to reduce costs for buyers and to make homeownership more attainable. But these measures would simply increase borrowing costs and make it so millions of Americans no longer qualify for loans – destroying their chances of owning a home.
Below are some of the biggest myths around the tri-merge system, and why they’re falsehoods.
Myth: Switching to a single-pull credit report model will significantly reduce closing costs for borrowers.
Truth: The cost difference between tri-merge and other credit reporting proposals is negligible in the greater context of mortgage closing costs. Depending on the state, average closing costs for a home purchase can range from 1-3% of a home’s sale price, which can total upwards of $17,000 in some areas. A tri-merge report costs the average borrower only around one or two hundred at most per loan – barely a percent. This is a minuscule fraction of the price compared to other costs.
Moreover, data shows that removing one credit report can cause up to 27.8 million consumers to drop to lower score bands. This could lead to borrowers moving into a higher pricing tier, meaning higher monthly payments and thousands of additional dollars in avoidable interest owed over the lifetime of the loan. In other cases, it could leave 10 million consumers potentially unscorable, causing 26% to shift from loan-eligible to declined. For families already struggling in today’s housing market, an additional underwriting barrier only makes the path to homeownership harder.
MYTH: A one-credit report would provide an equally accurate picture of a borrower’s credit when applying for a home loan.
TRUTH: No one credit bureau captures a complete credit history for all consumers. Using the tri-merge system mitigates the risk of important data falling through the cracks by ensuring lending decisions are based on one’s complete and balanced credit history, expanding access to mortgage loans for countless individuals and families – and avoiding distortion that could raise costs.
Not all lenders report to every bureau. Timing lags mean one bureau might reflect a recent payment while another does not, and errors like name variations or merged files exacerbate gaps. Disregarding available data will result in a less holistic picture of a borrower’s credit. At this scale, the impact could undermine the safety and soundness of the entire housing market, potentially leading to upsets like the 2008 crisis.’
MYTH: Reducing tri-merge reporting would improve competition in today’s mortgage lending ecosystem.
TRUTH: True competition thrives on accurate underwriting, not gaming fragmented data that amplifies defaults and market instability, as evidenced by FHFA’s retention of tri-merge for systemic resilience. Many have increasingly challenged the narrative against the tri-merge – pointing out that much of the criticism has been narrowly aimed at the credit bureaus while largely ignoring the outsized market power and profitability of FICO. This imbalance matters.
FICO’s economic leverage, pricing control, and lack of meaningful competition have shaped borrower costs and lender workflows far more than the reporting framework itself – making it a more significant contributor to higher closing costs than the tri-merge model it’s compared against.
