In the world of lending, financial institutions must make decisions on loan pricing with the goal of the accurate price possible. For this reason, lenders have traditionally relied upon information from TransUnion, Equifax, and Experian. With the information from these credit bureaus, lenders would take the median score to avoid having a credit score being affected by an outlier. This also provides lenders with financial information which may make a customer ineligible for loans as well.
However, some lenders have begun using information from only 2 bureaus, called a bi-merge credit report. While excluding one bureau may seem small, it is estimated that at least 18% of consumers have their loan improperly priced due to bi-merge credit reports. On a $350,000 loan, this could mean a price discrepancy between $3,000 and $5,000, Furthermore, since not all information is being ordered, consumers can shop around lenders until they find a price that they may not qualify for.
Ultimately, using all 3 bureaus protects lenders against credit score outliers and captures the fullest risk profile possible. If you want to make sure that a consumer is getting the most fair and accurate price possible, ordering reports from all 3 bureaus is the way to go.
