Home loan credit report sent to other lenders

Apply for a mortgage and everyone will soon know

There is a lot of genuine concern about identity theft and financial fraud these days, and with good reason. In the electronic age, it is all too easy for someone to obtain personal or financial information about someone else and to use that information for personal gain. The authorities warn consumers to be careful about sharing Social Security numbers and other personal or financial information with strangers, and that is sound advice. You never know what will happen if someone else should obtain such information about you.

So it would probably some to a surprise that if you apply for a mortgage, a home equity loan, or a line of credit, certain companies will share that fact with other lenders besides the one you’re talking to. Your lender makes a credit check when you apply for a loan and within 24 hours, numerous other lenders in town will have received, without your knowledge, a copy of your credit report, as well as other information about you, such as your Social Security number, your income, your debt to income ratio and a host of other things.

Why is this happening? Because lending is a competitive industry and companies that specialize in mortgage information have realized that lenders will pay them handsomely to receive this information. Once the other lenders have this information, you will probably start receiving phone calls from them, as they urge you to do business with them instead of your chosen institution.

Lenders subscribe to the service, which essentially provides them with daily reports of who in their area has applied for loans within the last 24 hours. This makes it fairly easy for lenders to call consumers and try to make them a better offer. It also, unfortunately, makes it easy for people with criminal intent to steal that information and use it for less honorable purposes, such as identity theft or mortgage fraud. There is really no limit to the number of criminal activities that you can pursue if you have complete financial information about someone else. You can take out credit cards in their name or other loans. It typically takes victims of identity theft more than 100 hours of work to sort out problems associated with this crime. It can take years to undo the damage done to a credit report by an identity thief.

At the moment, there isn’t much that consumers can do about the fact that their personal and financial information is being shared so openly. Doing so is not currently illegal. There is a movement to try to make it so, but right now, it’s still in the works. In the meantime, consumers should be overly cautious about strangers who call them out of the blue to offer them loans. Such offers may be legitimate, or they may not be. Even if they are and the lender on the phone offers you a better deal than the one you have obtained from your lender of choice, you should be careful and check out their references carefully. Buying anything from a stranger who calls you is risky, but taking out a mortgage from a stranger who calls you could be downright foolish.