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Trigger Leads are something that seems to be more prevalent and worrisome over the last few years.

So, what is a mortgage trigger lead? When you fill out a loan application, you are also giving the lender permission to pull your credit. When a lender pulls credit, it is pulled using certain “codes” that they must use to show they have permissible purpose to pull credit. These codes trigger the national Credit Reporting Agencies (Experian, Trans Union, Equifax) that a consumer is shopping for a mortgage, new or refinance.  The credit bureaus take the consumer’s information and turn these into trigger leads that are then sold to other lenders. It is important for you to know that your information is not being sold by us when pulling your credit, or our company. Nor is your information being sold by the third-party credit reporting agency we are using to pull the credit. Your information is actually being sold by the three major credit bureaus – Experian, Trans Union, and Equifax.

After your credit is pulled, you may start receiving dozens of phone calls, emails or physical mail from other lenders wanting your business. Is this legal? Unfortunately, yes. According to the CEO of the National Foundation for Credit Counseling (NFCC) “Under the FCRA, as long as the company that is buying the trigger leads meets certain legal requirements, it is legal in all 50 states.”  The Federal Trade Commission (FTC) has been a proponent of selling trigger leads in that they felt it can provide the consumer with more options when they are looking to buy or refinance a home. For most consumers though, ending up on a trigger list can be something of a nightmare.

Trigger leads are normally sold in bulk lots and when a broker signs up to receive trigger leads, they can request them with certain parameters. They can request certain age groups, specific credit scores, certain neighborhoods, current mortgage payments…the list goes on and on.

There are steps you can take to prevent some of this activity.   Go online or call to opt-out of your information being sold. We cannot opt-out for you.

To opt-out of having your information sold by the credit bureaus, do one of the following:

Following are several tips for improving credit scores:

  1. Obtain a complete copy of your credit report AND scores from all three credit bureaus (Transunion, Equifax and Experian). Once you have the credit report, review it in detail to identify errors and inaccuracies.
  2. If any errors or inaccuracies are noted, contact the credit bureau and the specific creditor to report any errors or inaccuracies and aggressively pursue having all errors removed and inaccuracies corrected. If there are extensive errors or inaccuracies consider working with a credit repair firm which should have the expertise to help have you.
  3. Any outstanding judgments or liens should be satisfied or settled as soon a possible. Collections and charge-offs may or may not require attention so consult with a qualified mortgage professional.
  4. Manage your credit utilization rate for each account since this one factor is the second most important factor (behind making payments on time) that impacts your credit score. The credit utilization rate refers to how much of the available credit limit on an account has been used/charged. For example, if you have a credit card with a $1,000 limit and an outstanding balance of $500, the credit utilization rate on the account is 50%. Once the credit utilization rate exceeds 30% your scores will decline, when it exceeds 50% your scores decline again, when it exceeds 80% the scores will decline again. Paying down the balances below each of these thresholds will improve your credit scores.
  5. Make sure that you have enough accounts and credit history. When applying for a mortgage, many banks will require 3 open accounts that have a 12 month payment history. It is possible to have a mortgage loan approved with less than three current accounts or a history of less than 12 months. However, the lack of adequate accounts or history could require additional steps to be taken in order for the mortgage loan to be approved.

One last tip is to review your credit report and scores at least once a year and if possible twice a year (every 6 months). Alternatively, some type of credit monitoring service that will alert you anytime there is a significant change in your credit report such as a new account or derogatory entry can be utilized. Your goal is to know exactly what is on your credit report and know if something happens that requires your attention.

If you do these five things and proactively take control of monitoring and managing your credit scores, you will be well on your way to having excellent credit and excellent credit scores. Of course paying your bills on-time will help a lot as well.