Trigger Leads – What Happens When A Lender Pulls Your Credit Report?

Something for you to be aware of as you continue your home shopping. For a long time, the 3 main credit bureaus (Equifax, TransUnion, and Experian) have been selling your information to marketers. Those pre-approved credit card offers you get in the mail are the result of data purchased from these agencies. This is not a secret to anyone – been going on for years.

Recently, these 3 agencies have rolled out a new product that they are selling within the mortgage industry – something known as “trigger leads”. For a starting price of around $25,000 per year, mortgage companies can acquire the rights to be alerted whenever anyone within a certain zip code (or some other criteria) has their credit report pulled by a mortgage company.

Pulling Your Credit Report Equals More Telemarketers – What a Joy!

You see, in order to do your loan or help you fix your credit, your loan officer has to pull a credit report from these 3 agencies. The minute he/she does that, alerts are sent out to those other mortgage companies who have purchased the rights for your area. If your phone number, mailing address, and/or email address is on record at the bureaus, you’ll begin getting hammered with mortgage offers.

There is nothing you or your lender can do about it. Your lender has to pay the credit bureaus for your credit report, and then the credit bureau sells this information to these other places, and then the other places start filling your mailbox or calling you during dinner time. Quite frankly, it’s a disgusting practice, but there is nothing illegal about it and the credit bureaus enjoy the extra profit at the expense your privacy.

For now, that’s the way it is. Hopefully in the future, things will change. I suppose the next “product” (read, “extortion”) that the credit bureaus will start selling to mortgage lenders is your privacy, i.e. If your lender doesn’t want all of his/her competitors notified of your business, it’ll require payment of a hush-hush fee. That’s not available now, but I promise it will be soon.

What you need to realize about these “trigger lead” offers coming in:

• Regulation of deceptive advertising in the mortgage industry is very poor, so expect to see some “amazing” offers as they try to get you to apply with them.
• Many of these offers are disguised in such a way that you may believe they are coming from or authorized by the lender you’ve applied to.
• Truth in Lending laws are weak and don’t protect you very much at all.

So what do you do? Do you ignore all these offers and just trust that you are getting the best deal by sticking with the lender you applied with? Well, hopefully you’ve chosen that lender for reasons other than they had the lowest rate on some internet site and by this time, you’ve developed a relationship and a trust level. I wouldn’t throw that away for a .25% better rate from some trigger lead quote – especially when lending laws really don’t prevent outright lying to borrowers up until the final loan documents are printed and signed.

Trigger leads are disgusting and should be outlawed. Until they are, let’s help make sure they aren’t profitable for the buyers and seller of them by hanging up on anonymous phone solicitors and ignoring that mailbox full of “what a coincidence” loan offers that come a few days after your credit is pulled.

Related Articles:

• Should You Pay Off Your Mortgage Early?
• Making Sense of the new Tax Credit Extension
• Variable Rate vs. Fixed Rate
• Repair Your Credit
• Debt Consolidation – What to Look For, What to Watch Out For