If you're planning on buying a new home or looking to refinance, your lender will probably pull your residential mortgage credit report. Because mortgage lenders take on a significant amount of risk, they want as much of your financial background as they can gather. Unlike a standard credit report from one of the three national credit bureaus, an RMCR contains information from all three, so the lender gets a thorough look at your financial status, work history and other important information.
Three Credit Bureaus
When you apply for a credit card or finance a new car, the lender requests a credit report to get an idea of your creditworthiness. The national consumer credit reporting system is maintained by three agencies: Experian, Equifax and TransUnion. These three bureaus keep track of whether you pay your bills on time, your current debt load, if you've filed for bankruptcy, your past addresses, old and current employers and debts you've paid off.
Because the credit bureaus operate independently from each other, their reports don't always contain the same data and account information. There are many reasons for the differences, including varying reporting cycles. The bureaus also rely on creditors to supply the information they collect. Some creditors only report to one bureau, which means the other two miss out. Special data collection services specialize in providing the RMCR, which merges all three into one comprehensive report.
Calculating Credit Score
Different data means different credit scores. Depending on how much the information on your reports varies, your three credit scores might be pretty close or substantially different. If you apply with a spouse, your lender will look at her scores, too -- for a total of six scores. Each bureau uses its own math formula to figure your credit score based on the data it collects from creditors and public records. Using the RMCR, mortgage lenders dismiss the high and low scores and use the middle score to set your loan terms and interest rate.
For an RMCR to be acceptable under federal guidelines, it must satisfy specific criteria. For example, all account information listed on an RMCR is valid for 90 days and must be renewed after it expires. The RMCR must also state that it meets the standards of certain government-sponsored loan programs, such as FHA or VA loans and those serviced by Fannie Mae. Reports also must include all information discovered within the last seven years.
- USA.gov: Credit Bureaus and Credit Scoring
- Smart Credit: Why Is My FICO Score Different at Each Credit Bureau?
- Smart Credit: Applying for a Mortgage? Why All Three of Your Credit Scores Matter
- Bankrate: How Credit Scores Work, How a Score Is Calculated
- Mint: What Is a Residential Mortgage Credit Report?
- U.S. Department of Housing and Urban Development: Standards for Residential Mortgage Credit Reports
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