The national credit bureaus (Equifax, Transunion and Experian) keep track of how much you owe, what your payments are, your maximum borrowing limits and when and how often you are late on your payments. In addition, they report any matters of public record that you may have, like bankruptcies, short sales, foreclosures, judgments, etc. This information is summarized, analyzed and given a score from a low of 350 to a high of 850; it is called a credit score. It should also be noted that credit bureaus do not have access to consumers’ income or asset information.
Independent credit reporting companies gather this information from the national bureaus and sell the data to leads-gathering companies without customers’ express permission or consent when consumers authorize a lender or other creditor to obtain their credit report. These are called ‘Trigger Leads’.
When a consumer selects a mortgage lender and starts the loan approval process, the lender will request authorization from the consumer and order a credit report. Within 24 hours of providing a credit report to the lender, credit reporting companies are likely to have sold the consumers’ name, address, credit scores, revolving credit balances, mortgage balances, etc. to a third party who in turn sells it to leads companies. These ‘trigger leads’ are sold to the customer’s current lenders, direct mail and email-spamming mortgage lenders who promptly contact the consumer to offer their mortgage options. Theoretically, your social security number and account numbers are not compromised but your name, address, contact information, credit scores and details on your credit report are all up for sale.
Before loaning money or extending credit, your lender will need a credit report and must ask you for written authorization to obtain your credit report. It is against the law to obtain a credit report without the consumer’s permission. Lenders pay credit reporting companies for these credit reports and use this information to decide whether or not to extend credit to you and, if so, at what rates. Consumers who have not been responsible about paying back their debts on time have lower credit scores (under, say, 680), represent higher risks to creditors and, therefore, will pay higher interest rates and/or fees when borrowing money.
These credit bureaus play an important role in our economy and considering the massive amounts of data that must be digested, organized and tabulated for virtually every adult in our country who has ever had credit, they do a very good job. However, there needs to be a more concerted effort in congress to put a stop to the release of a consumer’s confidential information without express consent. In the meantime, consumers can ‘opt-out’ of the selling of their data by going to
www.optoutprescreen.com. If time allows, consumers should stop the selling of their data before their lender runs a credit report. It can take up to 5 days from the time you ‘opt out’ until the credit reporting companies stop selling your personal information.