Just when you think you’ve got this whole credit thing down, some new credit-related phrase creeps into the industry’s vocabulary: DTI ratio, APR, amortization, and the list goes on . Let me introduce you to the world of mortgage credit reporting, which is very different than just “regular credit reporting.” There’s an entire world of intermediary credit reporting companies called Mortgage Reporting Companies that service the massive number of mortgage lenders and brokers. Follow me…
How Mortgage Lenders Gather Your Credit Data
When you apply for a credit card or an auto loan, the lender will buy one of your three credit reports directly from one of the three credit reporting repositories; Experian, Equifax or TransUnion. They’ll then use that information, and the score they bought at the same time, to make their approve/deny decision and set the terms of your new account. That process occurs tens of thousands of times every single day.
When you apply for a mortgage loan, the game changes. Mortgage lenders don’t typically buy one of your credit reports — they buy all three of them. And, if you’re applying jointly with a spouse or someone else, the lender will buy all three of their credit reports, too. So, that’s 6 credit reports and 6 FICO scores (FICO is still the score used in the mortgage industry) of which the lender or broker will take possession.
What is a Residential Mortgage Credit Report (RMCR)?
Now, that’s a lot of credit reports and a lot of pages. It’s also a ton of redundant information. Think about the joint credit card you have with your spouse. That likely shows up on all 6 of your collective credit reports. Does the mortgage lender really need to see the same account 6 times? Of course they don’t.
Because of the large amount of credit report data required by mortgage lenders, the need for an intermediary service exists. This service accesses all of the credit reports required by mortgage lenders from the big 3 credit bureaus and then consolidates them into one easier-to-read credit report. This credit report is called an “RMCR,” or Residential Mortgage Credit Report, and the companies that provide them are referred to as mortgage reporting companies.
These companies act as brokers or resellers of the data maintained by Experian, Equifax and TransUnion. The mortgage lender will subscribe to their services and commonly request a credit report on a mortgage applicant or applicants. The mortgage reporting company will then go to the big 3 credit bureaus on behalf of the mortgage lender and buy the applicant’s credit reports and FICO scores.
But before they deliver this large amount of information back to the mortgage lender, they’ll combine the information into one RMCR. The credit score information will be displayed in one section, the negative data will be displayed in another section, and things like inquiries and personal identification information will be displayed in their own sections. This merged credit report (often called a “Tri-merge”) is considerably easier to read than reading six separate credit reports is.
How Can I Get a Copy of My RMCR?
If you’ve applied for a mortgage-related loan, you probably have your RMCRs in your closing paperwork, as mortgage brokers and lenders will often give you a copy. It’s a very valuable aggregate of information because it’s a comprehensive study of all of your credit reports and it includes your actual FICO scores, along with the 4 reasons why each of them wasn’t higher.
John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. The opinions expressed in his articles are his and not of Mint.com or Intuit. Follow John on Twitter.