Mortgage Triggers, Part 1

When a potential borrower applies for a home loan or to refinance, a mortgage company puts in a "hard" inquiry to one or more of the credit agencies: Equifax, TransUnion, and Experian. Information contained in a borrower's credit report (years of credit history, late payments) is required to establish his/her creditworthiness. A favorable credit history can result in better interest rates and terms on a mortgage loan.

When the borrower's credit history is pulled from a credit agency's database, it creates a "trigger" within the reporting system. This trigger essentially alerts the credit agency to send information about the inquiry to credit data buyers. These companies then aggregate this data and sell it to their clients (often other mortgage companies.)

This is why you may receive calls and letters from other mortgage companies when you apply for a home loan or refinance. We don't sell your data -- we want your business and the last thing we'd ever do is sell your information to a competitor.

Tomorrow, we'll discuss why "trigger leads" are valuable to mortgage companies. And next week, find out whether you can "opt out" of the trigger system.