Original Post on AICWEBLOG on November 12, 2006 by Jim Knox.
Once you’ve applied for a home loan or you start shopping for a good refinance opportunity every mortgage lender is aware that you have been shopping for a good refinance opportunity because it’s possible the information you gave out when you completed the application isn’t as confidential as you might have thought. Your private financial details may have been sold to the highest bidder.
The top three Equifax, Experian and TransUnion market credit “triggers,” a highly profitable sideline for all of the big three credit collection bureaus, (and business financial analyst Dun & Bradstreet is also a player) although Experian seems to be exploiting their product with great intensity over the last few years.
Lenders and others, can subscribe to a trigger service with one or more credit bureaus. There are over a dozen parameters that a subscriber may chose from and these subscribers will be instantly notified if there are changes in the credit profile of current customers. These triggers may be employed by subscribers as risk alerts, collections assistance, and more recently as marketing opportunities.
In collections, for example, a triggering event might be a change in a person’s or business’s credit history such as a payoff of some delinquent debts that might indicate renewed liquidity or information on a new location for a missing debtor.
A risk alert trigger would be one that indicates that a customer is taking on substantial additional debt or begins to exhibit a pattern of late payments or even of minimum payments on a number of accounts. This is the type of trigger that can result in reduced or even closed credit lines or a sudden increase in interest rates.
Triggers have been available to lenders for years. However, new technology is morphing these reports into a totally new type of product, one that can be customized by combining a number of parameters and is available to subscribers nearly instantly. This is NOT good news for you.
It has gone so far off center that Experian permits a lender to submit a list of names (from its current portfolio? Maybe you?) to be monitored for credit shopping or request that a list of names (not necessarily existing customers) that match a specified profile be generated on a regular basis. In addition, marketing, risk, and retention triggers are now available on a daily, weekly, or quarterly cycle.
It is in the marketing area that Experian has begun to strongly push its trigger products and that could be disconcerting, particularly to the consumer shopping for a mortgage loan.
The credit bureaus have provided trigger service to mortgage servicers for some time; and in the throes of the refinancing frenzy this was a popular product. A servicer wanted to know if a customer was seeking additional credit in order to approach him and try to retain the mortgage business themselves through a refinance or to cross-sell other products such as mortgage insurance or credit cards. As the refinancing boom has waned, however, the credit bureaus are now offering the trigger services to all comers. In other words, they are selling mortgage trigger leads.
Experian touts its product on its website thusly: “you can quickly and precisely find credit worthy customers with recent credit activity who are most likely to respond to your specific offer… And who are the kind of credit worthy customers you would like to attract.”
In other words, if your mortgage customer is shopping around to refinance, we will alert you so you can take action to retain that business. And we will also notify you if a total stranger who meets your parameters of location, credit score, etc. appears to be seeking financing.
Perhaps the borrower will get a better deal - in the words of the Lending Tree ad - “when banks compete you win.” But there are a couple of troubling aspects. First of all, the lender who is initially seeking your business is paying for the credit report that triggers the trigger putting his very own mortgage lead on the open market to be sold as a credit trigger lead for profit to his competitors. Second, it is yet another in the endless examples of how an individual’s privacy is ignored every day.
TransUnion and Equifax in addition to Experian, are selling these kinds of trigger list leads. As stated above, we found only Experian actively marketing the product online.
Brokers would typically pay about $15,000 to sign up for the service plus another $10,000 to $12,000 per month for the lists.
The law requires that anyone contacting a consumer from such a lead do so with a firm offer of credit and Experian’s website specifies that requirement for lead purchasers. However, most often, the calls to consumers are more in the nature of fishing expeditions. You tell us what you’re looking for and we’ll see if we’re doing better.
I am also unclear as to how a mortgage broker who purchases these lead can get around the Do Not Call regulations. These regulations do not allow calls unless one has a prior relationship between the caller and his target. Is a borrower’s involuntary relationship with the credit bureau enough to satisfy this requirement? I don’t know, that is something our legal beagles are looking into, more on that in the near future.
Using this credit trigger list allows a company to increase the response rate to send you “pre-approved” credit offers by reaching you at the precise time you are actively shopping for credit. You are identified as an “opportunity” to make firm credit offers, as often as daily.
On another scary note, these sales leads that look as though they must be coming straight from a credit bureau are available not only to lenders but also to companies who then resell them, probably in smaller packages to those seeking leads. There are ads online by several companies marketing leads.
The Federal Trade Commission says these lists are perfectly legal and most of the offers are legit. But if you want to remove your name from the “trigger lists,” here’s how to opt out:
Call 1-888-5-OPT-OUT (1-888-567-8688).
You can also contact these companies and complain about their practices and maybe, just maybe someone at their company will give a hoot about you and your credit worthiness. Personally, I doubt it.
• Equifax
• Experian
PO Box 9554
Allen, TX 75013
(888) 397-3742
Web site: www.experian.com
• TransUnion LLC
P.O. Box 1000
Chester, PA 19022
(800) 888-4213
Web site: www.transunion.com