Charging a Fee to Cover the Cost of Credit Reports

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Question:

We are taking monetary hits for the cost of credit reports on Pre-approvals. Can we require a $20 up front fee to cover our costs? In addition, how must we disclose it since the reports range from $10 - $16 in actual cost?

Answer:

I believe you are suggesting that you charge an application fee. You could charge the $20 application and as long as you never refunded it, it would not be considered a finance charge. If you choose to then pick up the charge for the credit report, if it a loan subject to RESPA, the credit report fee would then be listed as POC.

First published on BankersOnline.com 8/15/05