New data from Equifax shows that only 35 out of every 100 mortgage applicants are closing in 2026, down from 65 out of 100 in 2020. That decline is more than a volume story. Each fallout loan carries unrecoverable costs, including credit reports, appraisals, title work, and underwriting labor, making conversion rate one of the most important drivers of lender profitability right now.
At the same time, one of those upfront costs is rising sharply.
The Equifax analysis shows that since 2020, the cost of legacy credit scores used in mortgage underwriting has surged from just $0.63 to roughly $12 per score (including re-issues), a nearly 1,800% increase. That growth has pushed credit scores from a negligible portion of total report costs to nearly half of the overall expense.
Score Costs Now Rival Core Credit Data
The report breaks down the components of a typical mortgage credit report, including consumer credit data, third-party scoring, technology, compliance, and integrations, and finds that third-party score providers are now commanding a significantly larger share of the total cost stack.
In 2020, score providers accounted for roughly 9.5% of total credit report costs. By 2026, that share has climbed to 46%.
Meanwhile, the cost of the underlying credit data itself has remained relatively stable.
That shift matters operationally. Most mortgage transactions require multiple credit pulls per borrower, often across all three bureaus, meaning lenders are absorbing these higher costs several times per loan, including loans that never close.
Tri-Merge Requirement Amplifies Cost Pressure
The industry’s reliance on tri-merge credit reports continues to magnify those costs.
Because each bureau requires its own score, total credit score expenses effectively triple for loans that move to final underwriting.
In a lower-conversion environment, that creates a compounding effect: more files, more credit pulls, and fewer loans reaching the finish line to absorb those costs.
Cost Control Is Moving Earlier In The Funnel
That dynamic is forcing lenders to rethink when they incur credit expenses.
While a tri-merge report is still required for GSE-eligible loans at closing, lenders have flexibility during the shopping phase to pull one- or two-bureau reports to assess borrower viability before committing to the full cost.
In practice, that means pushing more decision-making upstream — filtering out weaker files earlier to limit exposure to rising per-loan costs.
Credit Score Competition Moves From Policy To Practice
At the same time these costs are rising, the structure behind them is starting to change.
The Federal Housing Finance Agency this week moved forward with allowing Fannie Mae and Freddie Mac to accept VantageScore 4.0, opening the door to real competition in a market long dominated by a single scoring model.
That matters because the same layer driving most of the cost increase — third-party credit scores — is now the one facing pricing pressure.
The Equifax analysis points to a potential $1 billion savings opportunity tied to broader adoption of lower-cost scoring alternatives.
For lenders, this marks the first real opportunity in decades to influence one of the fastest-growing line items in the cost to originate.
Bottom Line For LOs
The takeaway isn’t just that credit is getting more expensive; it’s how that cost interacts with fallout, and what’s starting to change.
- Fewer loans are closing, increasing the cost burden per funded deal
- Credit score pricing has become a primary driver of that cost
- And new competition at the GSE level could begin to reset the economics
For LOs, credit is no longer a routine step — it’s a strategic decision. When and how you pull it doesn’t just affect workflow; it directly impacts profitability.
