Mortgage brokers may charge you $35 to $40 for a preliminary "merged" report of your data from two or three credit reporting agencies. But it won't include final checks of court records.
The "mega" report, or the residential mortgage credit report as it's officially known, is required if you're applying for a federally insured loan. That report is merged information from the big three credit bureaus, plus a personal interview with you and/or your spouse, verification with landlords and employers, and checks of public records such as judgments and bankruptcies.
In Washington state, mortgage brokers can charge you only what they paid for a credit report. They cannot add to third-party service charges.
In the case reported earlier, the broker paid from $1.25 to $2.80 to Equifax for preliminary reports, then charged consumers $40. The state required him to make restitution.
In the story I said the broker paid about $5 per couple for reports. Several brokers responded that as much as they'd like reports for $5 they didn't think it was possible, because the reports they use require more work than the ones we consumers buy for $8.
One broker frankly acknowledged he doesn't want to waste an hour comparing three separate credit reports in different formats, so he orders a "merged" preliminary report and charges the customer.
Impact on consumer
Here's what this could mean to you: If you're a couple about to buy a home you could spend $133, or more, on various credit reports.
Let's say you monitor your credit reports once a year. You got your freebie last spring from TRW, and you haven't been denied credit recently, so you will have to pay for reports from the three major bureaus.
That's $24 a person, $48 a couple. Next you go to a broker who wants a different format and who orders a preliminary report from two or three bureaus on you for $35 to $40. (Oddly enough the corporations that deal in merged reports usually charge the same price for a report on an individual consumer as they do on a married couple.)
Could you persuade the broker to accept the reports you just got from credit bureaus instead of ordering another one? Maybe. It's likely to hinge on how he/she feels about plowing through three reports, and/or your credit.
If you proceed in the transaction, the broker finally says he/she must order the residential mortgage credit report for $85 or more. (Some brokers say the costs for this report can go as high as $95.)
If you paid $35 for a preliminary report, you may only be charged another $50 or so to make up the difference. But that will vary with the corporation generating the report.
Some allow you to "upgrade" a preliminary report to the full-blown report by paying the difference. But time frames vary. Some corporations allow upgrading in 30 days, others for 60 days or beyond.
The bottom line is, in this state you should not pay any more for the report than the mortgage broker was charged.
Because of all the credit reports ordered by brokers, some in the industry recommend against ordering your credit report before you see a broker. You could avoid some of the charges by not ordering your own reports.
On the other hand if you've ever had credit problems, or inaccuracies on your reports, you'll want to order a fresh set so there are no surprises.
How to order a credit report
Need to check out your credit report? Here are addresses for the major credit reporting bureaus and instructions.
To order a report, give your full name, including generational designation (such as Junior or III); your current and previous addresses for five years; if married, your spouse's full name; Social Security number; date of birth; daytime and evening phone numbers; a photocopy of your driver's license or a current billing statement to prove your identity.
TRW Credit Data Division offers consumers one free report a year. Order it from TRW, Complimentary Credit Report Request, P.O. Box 2350, Chatsworth, CA 91313-2350.
If you have been denied credit recently, you are entitled to a free report under federal law. Write TRW, National Consumer Assistance Center, P.O. Box 949, Allen, TX, 75002-0949. Include a copy of the letter you received denying credit.
If you want to buy a copy of your credit report, write TRW, National Consumer Assistance Center, P.O. Box 2104, Allen, TX 75002-2104. The cost is $8 plus state tax. For other information on TRW call (800) 682-7654.
To obtain reports from the other two bureaus write:
Equifax Inc., P.O. Box 105873, Atlanta, GA 30348, or fax your request to (404) 612-3150. If an Equifax credit report has caused a delay or denial in an application for employment, insurance or utility service, call (404) 612-3321. You may order a report and charge it to a credit card by phoning 1-800-685-1111. ($8)
Trans Union Corp., Consumer Relations Disclosure Center, 760 W. Sproul Rd., P.O. Box 390, Springfield, PA 19064-0390. ($8)
How to order consumer handbook
For a free copy of the new 123-page updated Consumer's Resource Handbook, write the Consumer Information Center, Pueblo, CO 81009.
