Saturday, June 19, 2010

3 precautionary steps before you apply for a loan

I got the following inviting email offer in my SPAM folder: "Reach more Qualified Prospects with Credit Bureau Data". Someone claiming to be Amorena Cervantes from Endless Resources, Inc. was offering to sell me a long list of mortgage leads based on mortgage triggers.

What are Mortgage Triggers?
When you apply for a mortgage, your lender pulls a copy of your credit report,which triggers an inquiry. The credit bureau can then turn around and sell your name to other mortgage companies who may want to compete for your business. This is called a mortgage trigger lead.

Here are some examples of information that may get sold to telemarketers:
  • whether or not you've applied for a mortgage recently
  • your location
  • your credit rating
  • your loan-to-value (LTV)
  • aggregate balance of your open mortgage trades
  • your combined mortgage and HELOC balances
  • age of your most recent mortgage trade
  • your mortgage lender name
  • your current mortgage type

Is this legal?
Yes, the Fair Credit Reporting Act allows the sale of your name. That means credit bureaus can legally sell your information to third-party vendors if you don't do anything to prevent them from doing so. That's why you need to take some action to protect yourself from trigger lead harassment.

1. Sign up for OptOutPrescreen.
Go to and follow the instructions. This will stop the four credit bureaus (Equifax, Experian, Innovis and TransUnion) from selling your name as a trigger lead. Opting out puts a stop to trigger leads for five years.

Furthermore, some lenders say that by opting out, you can add 10 to 15 points to your credit score! For permanent restraint, you will need to mail in your registration, which is also available on the OptOut Web site.

Here is the confirmation message you will receive if you go through the online 5 year opt out procedure. "The following is a confirmation of your 5 year Opt-Out request. Please click here to print this confirmation for your records. Your request will be completed within 5 business days. Although your request becomes effective with Equifax, Experian, Innovis and TransUnion within five business days of your request, you may not see an immediate reduction in the amount of offers you receive. This is because your name may have already been provided to some companies that have not yet mailed their offers to you. You may continue to receive certain firm offers for several months.
While your name will be removed from the lists that Equifax, Experian, Innovis and TransUnion provide to businesses for the purpose of making you a firm offer of credit or insurance, you may continue to receive offers from sources that do not use Consumer Credit Reporting Companies to compile their lists."

2. Put your name and phone number on the National Do Not Call Registry. You can register your cell phone number as well. Do this at least a month before you apply for a loan because it takes 31 days to take effect. You'll have to re-register every five years because the order expires at the end of five years.

3. Register with the Direct Mail Association to prevent mortgage lenders from sending you direct mail. You can register online or through mail. Either way, it will cost you $1.00, which can be charged to your credit card. Register early because the DMA distributes its lists quarterly, so it could take a while to become effective. This registration is good for five years.

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