What is a Mortgage Credit Report? How is it Different Than a Regular Credit Report?
When you apply for a mortgage the lender or broker does not pull a normal credit report, like what would be pulled by an auto lender or credit card issuer. Instead they pull what’s referred to as an “RMCR” or Residential Mortgage Credit Report. So what is an RMCR and how does it differ from a garden variety credit report?
A mortgage credit report is a credit report times three! Since a mortgage loan is for a substantially larger amount and for a longer time frame than most loans, there is more is at risk for the lender. Therefore, to qualify for a mortgage more information is required in the underwriting process than for a credit card or auto loan.
When you apply for a credit card, auto loan or student loan, the lender reviews your credit report and credit score from one of the three credit reporting agencies: Equifax, Experian or TransUnion. Other personal information may be verified such as income and assets. A decision is made whether you qualify for the loan and this information is also used to determine the interest rate and terms of the loan. Point being, the evaluation is limited to one credit report.
Applying for a mortgage requires more information and the approval process can take several weeks. Mortgage lenders usually review your credit report from all three credit bureaus and obtain scores from each. If you apply with your spouse, the lender will request 3 credit reports and 3 scores for you and the same for your spouse resulting in 6 credit reports and 6 scores for the lender to review. Because of the amount of data involved, intermediary companies or mortgage credit reporting agencies are involved. These companies obtain the credit reports from all three credit reporting agencies on behalf of the mortgage lender.
To make it easier to review the reports, these companies combine the credit reports into a “tri-merged report”, which is the RMCR referenced above. The credit information from all three credit bureaus are combined in one report and divided into sections. The credit score information is displayed in one section with a score from each credit bureau (these are usually FICO scores), credit history in another, the negative data is displayed in another section, and inquiries and personal identification information are displayed in their own sections. This merged credit report is considerably easier to read than reading three or six separate individual credit reports. The mortgage lender reviews this information as part of the underwriting process along with your income, assets, and tax returns.
You can’t order this credit report from the mortgage credit reporting companies, but you can request a copy from your mortgage lender when you apply for a mortgage. You can request copies of your credit report from each of the three credit reporting agencies for free at annualcreditreport.com, but they won’t be the merged report.
As it pertains to the multiple credit scores pulled by the mortgage lender, they normally use the numeric middle number from which to base their decision. This is a not so conservative and not so aggressive approach to underwriting. Still, your scores should be fairly similar unless one credit report is considerably different than the other two.