Home loan could bring calls from other lenders

Credit bureaus share names of people who apply for a home loan

When one applies for a home loan, one assumes that the process will be strictly between the customer and the lender. The customer fills out an application and the lender assesses it, deciding if the customer should be granted the loan or not. Of course, this decision isn’t just pulled out of a hat; the lender makes use of the customer’s credit report and score in order to see if they have a history of paying promptly. The three main credit bureaus, Experian, Equifax, and Trans Union, provide this information to lenders in order to help them make these decisions.

So many people who apply for a loan are justifiably surprised when they start getting letters and phone calls from other lenders who are interested in offering loans of their own. How does that happen? How do these other lenders find out about a loan application?

The answer is that the credit unions provide that information. Lenders pay the credit bureaus for information on “trigger lists.” The bureaus know who is applying for loans, and they realize that other lenders will be willing to pay for the names of potential customers. So they sell them.

That means that if you assume that your application or transaction with your lender is a confidential one you are mistaken. The credit bureaus will make it known to anyone who is willing to pay for it that you are available as a customer for a loan. This information includes not just your name, address and phone number, but debt balances and credit score.

The bureaus defend this, not by saying, “Well, we are here to make money” but instead by saying that the service they offer is in the best interest of the consumers themselves. By offering the names of customers to other lenders, the bureaus claim that they are making consumers aware of other competitive options that may be available to them. This suggests that after a customer has applied for a loan that he or she might change their mind and instead apply elsewhere. That seems unlikely, but anything is possible.

Since there is no telling who is buying this information, customers should be a bit cautious about responding to cold calls from lenders. If you have already lined up suitable financing with the lender of your choice, you could be taking a risk by changing directions and going with a lender who calls you out of the blue. There is no guarantee that any lender who contacts you in this way is legitimate, nor is there any way to know that the offer they may make to you is genuine. Consumers are urged to be cautious regarding any call received in this manner.

Consumers who do not care to be included on these “trigger lists” can have their names removed by calling 1-888-5-OPT-OUT (1-888-567-8688) As we are not big fans of sales people or cold calls, we recommend that anyone who values their privacy do so prior to applying for a home loan or line of credit.