When applying for a mortgage or other loans, lenders are restricted by federal regulations on the fees they can charge before providing you with a clear cost outline called a Loan Estimate (LE). However, the upfront credit report fee is a key exception to this rule.
The upfront credit report fee covers the lender’s direct cost of obtaining your credit report from major credit reporting agencies (Experian, Equifax, and TransUnion). Under the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) integrated disclosure rule (commonly known as TRID), this is the only fee allowed before you receive a Loan Estimate and express your intent to proceed with the loan application.
Why This Fee Exists
Lenders need your credit report to evaluate your creditworthiness and prepare an accurate Loan Estimate. Since pulling your credit report incurs costs payable to credit bureaus, lenders are permitted to charge a reasonable fee upfront to cover this expense. The Consumer Financial Protection Bureau (CFPB) requires such fees to be “bona fide and reasonable” to ensure fairness.
How the Upfront Credit Report Fee Works
- You submit an initial application.
- The lender informs you of the credit report fee, often ranging between $20 and $50.
- You pay the fee, usually by credit or debit card.
- The lender orders your credit report (usually triggering a hard inquiry).
- The lender provides your Loan Estimate within three business days.
After receiving the Loan Estimate, you decide whether to proceed with the loan, and no other fees can be charged until you do.
What Fees Are Not Permitted Upfront
Only the credit report fee can be charged before the Loan Estimate. Other fees, such as application fees, appraisal fees, rate-lock fees, or underwriting costs, can only be charged after you receive the Loan Estimate and indicate your intent to proceed.
If any lender demands excessive upfront fees—for example, a combined application and appraisal deposit—this likely violates federal law and should be viewed as a red flag.
Refundability and Variations
The credit report fee is typically non-refundable because the lender pays the credit bureaus immediately. Some lenders choose to absorb this cost rather than charge upfront fees as a customer service choice.
Additional Resources
For more details on Loan Estimates and how they protect you during the mortgage process, see our Loan Estimate and Mortgage Loan Cycle articles. To better understand your credit reports, explore our Credit Report glossary entry.
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