Trigger Leads – Credit Bureaus Selling Consumers Personal Info

Post Update: Consumers can go to www.optoutprescreen.com to have their names blocked from being sold as a trigger lead. I also posted a letter a borrower received from a company after their credit was pulled. Notice that the lender is pimping an option ARM product.

The three major credit bureaus, Equifax, Transunion, and Experian, have found a new way to make money off of people’s personal information. This new way is called trigger leads. What they are basically doing is selling your personal information to competing lenders anytime a lender checks your credit for the purposes of obtaining a mortgage. In other words, the act of applying for a mortgage triggers them to offer your name and contact information to competing lenders as a “fresh lead.” As a result, soon after you apply for a mortgage, you are likely to receive a call from another mortgage lender attempting to gain your favor. This may help competition, but I believe as a whole it is bad for consumers.

For those of you that don’t know, one of the hardest things about being in the mortgage business is obtaining new clients. It takes years of good work and results to build a solid referral base. For loan officers who do not have an established client base or worse, boiler room mortgage hack shops, buying “leads” is the only way they have a shot at making a living. In sales, a lead is contact information on someone who might be interested in buying your product. The more you have, the better your chances. The credit bureaus have realized that they posses the most valuable information in the mortgage business – qualified, ready to purchase or refinance leads.

When someone is applying for a mortgage, the bureaus track these “inquiries” as part of generating the consumer’s FICO score. By compiling the data of borrowers who have recently applied for a mortgage, in combination with their FICO scores, the bureaus can now sell your information to other lenders as mortgage leads. There are a number of problems with this practice. Primarily, the bureaus are sharing your personal information with third parties without your expressed permission. Given that so much in our society is based on credit scores and the prevalence of identity theft, I do not believe the bureaus should be engaged in these types of activities. The bureaus essentially have a monopoly on something that is almost as important as a social security number and they are using it to generate further profits. Credit reporting should be about reporting credit factually and accurately (something the bureaus sorely need to improve on), not generating obscene profits from selling the information of their subjects (the American public) unwillingly. In addition, applying for a mortgage is a personal matter. It is no one else’s business that you applied for a mortgage!

Second, as a lender, I certainly don’t appreciate the bureaus sharing my client’s information with the competition. Don’t get me wrong, I am as competitive as anyone, but they are piggybacking on my efforts to obtain clients. Additionally, I am the one paying for the credit reporting services from the bureau. They are basically charging me to get my client’s credit report, then selling the fact that I paid for your credit report to competing lenders.

Finally, I do not think it is in the best interest of the consumer. As mentioned before, the companies that are likely to buy these leads from the bureaus are generally not companies smart consumers would want to deal with. They are likely to be boiler room telemarketing companies with inexperienced employees who are trained to hard sell the unsuspecting lead. I cannot emphasize enough that the most reputable loan officers in this business do not need to engage in lead buying to obtain business. Our business is obtained from direct client referrals from previously satisfied clients. Fortunately, the media has picked up on this practice and written some fairly good articles about it. I would advise you to read these and contact your congressman or senator to make this practice illegal. The Washington Post writes a good article about this practice.

Because the bureaus have permeated so much of our daily lives, I doubt they are going to listen to consumers. It is already nearly impossible to get errors corrected in a timely manner, so I doubt this will be any different. Nevertheless, I thought you should know and this is my two cents.