How Lenders Use Tri-Merge Credit Reports to Screen Borrowers

October 3, 2013 | By Brandon Cornett | © 2017, | Our copyright policy

When you apply for a mortgage loan, the lender will obtain your credit report to see how you have borrowed and repaid your debts in the past. They do this to determine whether or not you are a “safe” borrower.

Lenders often use the tri-merge credit report (also known as the Residential Mortgage Credit Report, or RMCR) when evaluating borrowers. This single document can mean the difference between mortgage approval or rejection.

Tri-Merge Credit Reports: The Mortgage Lender’s Tool of Choice

Mortgage lenders have long used the tri-merge report when evaluating potential borrowers. It is called a “tri-merge” because it combines data from all three of the credit-reporting bureaus that operate in the U.S. (TransUnion, Experian and Equifax). It is used by a variety of creditors and lenders, including mortgage companies.

The tri-merge credit report is usually created by a third-party company that specializes in mortgage reporting, such as Avantus. Such companies pull reports from all three of the reporting bureaus and then merge, or combine, them into a single report.

The tri-merge reports used by lenders typically include credit scores, as well. This makes them very useful for mortgage companies, because they compile all of the necessary information (the three bureau scores and reports) into a single document. The benefits for the lender can be summed up in two words — convenience and coverage.

What’s Included in Your RMCR / Merged Report

So what’s inside your tri-merge report? Basically, if it has to do with credit or borrowing, it will show up in this document. Here is a list of items commonly found within a three-bureau merged report:

  1. The name of the company that prepared the report, as well as the company that requested it (lender or creditor)
  2. The name and address of the consumer / borrower to whom the report applies
  3. The consumer’s social security number
  4. The consumer’s credit scores from all three reporting bureaus (TransUnion, Experian and Equifax)
  5. A list of current and past accounts, dating back several years (credit cards, auto loans, mortgages, etc.)
  6. The amount currently owed on all open accounts
  7. The available credit limit for all open accounts
  8. A list of late or missed payments (delinquencies) for all accounts included in the file
  9. Public records, including any foreclosures, bankruptcies, tax liens, or legal judgments against the consumer
  10. A list of recent credit inquiries, possibly dating back several years
  11. A “file summary” section that summarizes key information for the lender or creditor, such as total credit usage

This list is not exhaustive. Your file may include additional items not on this list, depending on the company that produced the tri-merge report. These are just some of the most commonly reported items.

How It Affects Your Chances of Getting a Loan

Mortgage lending decisions are largely based on risk. The lender wants to know how much risk you carry, as a potential borrower. One of the ways they measure risk is by looking at how you have borrowed and repaid money in the past. The idea is that your past borrowing behavior is a reasonable indicator of your future borrowing behavior. Fair or not, that’s how the lending industry works.

That’s where the tri-merge credit report (a.k.a., Residential Mortgage Credit Report, or RMCR) comes into the picture. This document makes the lender’s job a lot easier. It pulls data from all three of the reporting bureaus and compiles them into a single, easy-to-read report. So lenders get the information they need for risk assessment, without a lot of redundancy or hassle.

Mortgage lenders use the tri-merge credit report to see how you have managed your debt obligations in the past. As you can see from the list provided earlier, these reports include a broad range of information relating to your borrowing history.

Mortgage lenders also use the credit scores that are typically included with merged reports to further evaluate you, in terms of risk. A higher credit score indicates a less risky borrower. A lower score indicates a riskier borrower. Riskier borrowers have a harder time qualifying for loans, and they usually get charged more interest as well.

This is why the tri-merge credit report is so important when it comes to mortgage approval. This single document can make or break your chances of getting a home loan.