October 19, 2011

Credit Bureaus (Not Banks) To Blame For Solicitations

October 19, 2011

Credit Bureaus (Not Banks) To Blame For Solicitations

Ever apply for a home loan then suddenly you’re inundated with new solicitations for credit? Don’t be too quick to blame the mortgage lender who ran your credit. It’s most likely not them. It’s the credit bureaus themselves—Equifax, Transunion, and Experian. Once an inquiry is made to them, they sell the data.

Conversely, your data is not sold by the (good) vendors mortgage banks and other creditors use to run your credit. Below is a note one such vendor sent their banking clients (including my firm) this week. It contains very useful consumer information about the “trigger lead” process used by the three major credit bureaus.

Every so often, we feel compelled to address the issue of so-called “trigger leads” being sold by one or more of the national credit bureaus (Experian, Transunion and Equifax).

First, as a trusted credit information service provider, please know that we do not sell or otherwise provide any information shared by it’s customers in the process of ordering a credit report or any other information service. Ever.

The national credit bureaus (aka repositories), however, have been supplying lenders for many years with these pre-screened marketing lists, including lists comprised of consumers who are currently shopping for a mortgage. The lead is “triggered” by the mortgage credit inquiry, thereby providing the purchaser of the trigger list with a very warm/hot lead on a consumer they know is already attempting to get pre-qualified for a mortgage.

What can you do to protect your borrower from being targeted? The FTC has mandated that consumers be given a choice to Opt-Out of these pre-screened marketing lists. If a consumer opts-out, your inquiry into their credit history will not trigger solicitations from other lenders.

Consumers may do this by visiting or calling (888) 567-8688. When discussing this option with your clients please make them aware of the following:

-Opting out (or not opting-out) has no impact on their credit score(s)

-Removing their name from these lists for firm offers of credit or insurance doesn’t affect their ability to obtain credit or insurance.

-Consumers may not submit opt-out requests on behalf of other members of their family.

-The opt-out process can take up to 5 business days to take effect and can be done on a 5-year or permanent basis.

Lastly, it has come to our attention that some of our clients may be concerned about inadvertently supplying their borrower’s phone number or e-mail address when ordering a credit report that might be used by another lender to solicit their borrower. Please know that regardless of whether you are ordering directly from our website or from your loan origination software, the only consumer data being passed to the bureaus in a credit report request is your borrower’s name, address(es) and social security number.

This of course raises the question: why can the bureaus sell your data? The short answer is good lobbying.

The longer answer is that, under the Fair Credit Reporting Act (FCRA), the major credit bureaus are permitted to include your name on lists used by creditors or insurers to make firm offers of credit or insurance. The FCRA also requires the bureaus to let you “Opt-Out” (as detailed above), which prevents bureaus from selling your data so you don’t receive credit offers that aren’t initiated by you.

Also don’t forget to ask your mortgage lender how they run credit, and if the vendor they use sells your data. This will normally be disclosed in the lender’s privacy policy.
Further reference:
FTC: Consumer Rights On Credit Reporting