Executives at mortgage lenders anticipate a minimum 20% increase in credit reporting costs in 2025 compared to 2024. And the soaring costs will hit as lenders try to dig out from multiple years of financial losses and mass layoffs.
In early November, Fair Isaac Corp. (FICO), the company behind the widely used consumer credit-risk assessment methodology, announced an increase in its wholesale royalty for mortgage originations from $3.50 to $4.95 per score. However, this is just one among many credit reporting costs for lenders, who must also absorb additional fees from credit bureaus and tri-merge resellers applied downstream.
Lenders told HousingWire that they have yet to see price increases from credit providers, as confirmations from the credit bureaus are expected in the coming weeks. However, in planning for 2025, many lenders have already started factoring in higher credit report costs based on initial discussions with vendors.
To start, FICO’s wholesale price hike translates to an additional $1.45 per score—equating to $4.35 per borrower and $8.70 per joint application for a tri-bureau credit report, the industry standard.
Michael Metz, operations manager at Arizona-based lender V.I.P Mortgage, which has 330 sponsored loan officers across 39 active branches, expects that most credit bureaus will raise their prices as well.
“By the time it’s all added in, we’ll see an increase of about $18-20 per borrower,” Metz said. This adds to the current level of $80-$100 for the tri-merge credit report and score bundle, based on FICO’s estimates.
“FICO set the stage for the pricing increase with their 40% increase this year. I think we’ll see most credit bureaus take that opportunity to do similar swings.” Metz said. “With pending legislation banning trigger leads, they’ll need to go conservative and make up the revenue – anticipating it passes – and increasing the pricing now to make up for that loss of revenue.”
At Tennessee-based First Community Mortgage, which operates with about 200 registered loan officers across 38 active branches, credit reporting costs are projected to increase by 22% in 2025.
“Our new pricing starts on January 1, and given our discussions with our vendor, we anticipate the expense to rise by $12 to $20 per report,” said Keith Canter, CEO at First Community Mortgage. “Currently, we pay $82, so for 2025, we are budgeting $100 per report. We should have the exact amount within the next two weeks.”
While the year-over-year price increase for 2025 may seem moderate compared to recent years, it represents a significant 72% jump from 2023 for First Community Mortgage.
FICO does not set the final price for customers. In 2023, the company implemented a tiered wholesale pricing structure ranging from $0.60 to $2.75 per score, which caused some lenders’ final costs to surge by as much as 400%. In 2024, FICO returned to a fixed royalty of $3.50 per score, applying the same rate for both soft and hard credit pulls.
Now that the 2025 wholesale price of $4.95 per score is official, HousingWire contacted the three major credit bureaus—Experian, Equifax, and TransUnion—to inquire about their 2025 pricing policies for mortgage lenders. However, none provided specific details or responded to the request.
In a statement provided to HousingWire, a spokesperson for TransUnion said, “Credit reports represent a fraction of a percent of the cost to purchase a home, and ultimately it is an individual mortgage lender’s decision whether to pass those minimal costs onto their customers.
We are proud of the role we play helping homebuyers qualify for a mortgage that meets their needs, and are likewise proud to supply consumers with free weekly credit reports to help them plan for their home purchase.”
Putting it into perspective
Jim Wehmann, executive vice president of scores at FICO, wrote in a recent blog post that the $4.95 royalty per score accounts for a small portion—approximately 15%—of the cost of a tri-merge credit report and score bundle. “With total average closing costs of $6,000, FICO’s share of total average closing costs before this new per-score royalty was only approximately two-tenths of one percent.”
However, executives at mortgage lenders view these costs differently. A white paper from the Community Home Lenders Association (CHLA) noted that credit reports are often pulled multiple times during the mortgage application process, as they are only valid for 120 days. Given that home searches can extend over many months, it can swell to hundreds of dollars.
According to CHLA, the credit costs for closing a single loan have increased from $50 in 2022 to between $150 and $200 in 2024. When factoring in credit reports for applications that do not lead to closed loans, the cost rises dramatically to $510–$725 per closed loan in 2024. CHLA plans to release a new estimate for 2025 in the coming weeks.
“The cost of the credit report may remain a smaller share of the total closing costs on a loan, but a mortgage company still has a loss from the other credit reports pulled that don’t convert into a closed loan,” Metz said. “That ends up having more impact on a mortgage company’s financial performance, which affects consumer pricing in a world with thinned margins.”
Phil Crescenzo Jr., a branch manager at New Jersey-based Nation One Mortgage Corporation, which has 52 sponsored loan officers across six active branches, said that overall costs associated with credit reporting at his branch now total $20,000 per month, more than double what they were two years ago.
“Part of that is credit rescores and updates, and some verifications – VOE, VOA, VOR items – through the credit report process, not just standard reporting,” Crescenzo said. “At some point, it does fall back on the borrower, or maybe the lender covers some, or they give them credit, but it’s all going to come from somewhere.”
The latest data from the Mortgage Bankers Association (MBA) shows that independent mortgage banks (IMBs) as a group saw improved profitability in Q3 2024, with an average pretax net profit of $701 per loan (18 bps).
However, 71% of IMBs reported profitability across both their origination and servicing operations—a decline from 78% in the prior quarter, and a 20% increase in credit reporting costs would bring down that 18 bps figure, industry analysts said.
The cost to close a loan
Canter, from First Community Mortgage, said that rising vendor costs are happening at a time when IMBs are striving to lower the average cost of closing a loan to below $10,000. At his company, credit reporting expenses account for 2% to 3% of the total cost per loan. But it adds to compliance and regulatory burden and irrational margin setting by competition, he said. “In the last two quarters, we have been profitable, thankfully.”
Leading U.S. mortgage lenders have taken steps to support originators in navigating the challenging market environment. Detroit-based Rocket Mortgage, for instance, introduced its Fee Freedom initiative in 2023, covering the cost of credit reports for brokers closing loans through its wholesale arm, Rocket Pro TPO. The program was extended into 2024.
“Next year, with all the increase, we’re going to have to sit down and look at it,” Rocket Pro TPO‘s executive vice president Mike Fawaz said. “Our decision is to continue to cover credit reports fees for our broker partners, similar to what we did the last two years. Now, we also did tell our broker partners that at one point, we will cover everything when the loan doesn’t close, but if a loan closes, we will charge for that. I don’t know if we’ll implement it next year or not.”
For now, Rocket is maintaining the program, as brokers are increasingly hesitant to pull credit reports due to its costs, according to Fawaz. He said this approach is an investment in strengthening Rocket’s broker network.