When we first began helping people with their credit we had noticed a trend of our clients who after being pre-approved for their home loans, were suddenly having new collections hit their credit right before closing, This couldn’t be a coincident. My gut told me there was more to this. I began my investigation.
What is a Trigger lead?
It’s a lead generated when a lender pulls a copy of a client’s credit report (hard inquiry) relative to a home or auto loan. But if you google it, everything you’ll find in regards to a trigger lead will talk about how other mortgage brokers will purchase these leads or other auto dealers, hoping to intercept a hot prospect with a better deal, better interest rate and etc….. The customer wins! Only in theory.
To be a little more specific, the credit bureaus are the biggest offenders when selling information. Filtered to micro target the ideal leads, and there is nothing hotter than the trigger lead. A lead that triggers from a hard inquiry of a mortgage lender or auto dealer. This consumer now becomes free game to other marketers. These leads are prescreened and generated to other marketers within 24 hours of the consumer’s credit being pulled.
Everything you will read in regards to this will refer to the other marketers as mostly Mortgage lenders and dealers. So I’ll be the first to break the newsto you: Collection agencies are buying these prescreened leads! And can absolutely do so legally. Collection agencies are also marketers, marketing for an easy debt to collect.
A marketer can target a specific type of lead by ordering list from the credit bureaus prescreened and filtered by location, credit score ranges, job types, age and any bit of information on a credit file. For example: a marketer, specifically a collection agency can purchase a list of prescreened and filtered leads, that just applied for a mortgage loan, and filtered down to score ranges of 620-640 with a collection 3yrs old and older, with an outstanding balance between 500-1000.00 reported with LVNV funding. It can be that specific. And they are.
So what makes these filtered trigger leads so attractive to collection agencies?
When getting a pre-approval from a mortgage lender, its common knowledge that the lender is going to pull a new credit file on that client before closing. The collection agency can easily buy up the old collection(s) reporting on the filtered file for pennies on the dollar. Then as the new collection agency, who legally owns the debt, can start their collection processes. And if not paid, they can and will not only report to the credit bureaus, but report it as a brand new collection, re aging the open date which is the date the new collection agency bought the debt. And yes this is legal.
I say this a hundred times a week. All derogatory credit effect the credit scores the same, regardless of what and how much. What makes the difference is when. The more recent the derogatory the more impact it has on the score. It could be a 5 year old debt, which normally would have little effect on the customers score, and then sold to a new collection agency with a brand new open date and literally could drop a credit score a hundred points.
So once again… What makes these trigger leads so attractive to collection agencies?
The two biggest motivators in the world are a deadline, and the fear of loss. What was once just an irritating minor glitch in a person’s credit file is now like staring down the barrel of a trigger lead. And the client pays!
Here is one example of many. You’ll see the hard inquiry on the consumer credit report provided by Experian on the left side of the page an Inquiry by a mortgage lender that the customer authorized. Then on the right you’ll see the soft inquiries for “promotional reasons” and there is the name of a very familiar collection agency pulled the same day. It’s not a coincidence.
How do you stop trigger leads?
“Opt-Out”! The FCRA provides you the right to “Opt-Out”, which prevents the Consumer Credit Reporting Companies from selling your information… Including “trigger leads”. Go to www.optoutprescreen.com and follow the easy steps.
I started this blog talking about a trend of our clients who were being hit with new collections in the middle of their mortgage process. We have since optioned our clients out from any prescreening or selling of their information. It literally just takes a few minutes and we haven’t had a problem since.
I wouldn’t dare end without plugging my business. I always tell my client’s during our consultation in detail what we do and how to remove their negative credit and get to the score they need, so that they may do it themselves but, if like so many time is an issue then well take care of it for you. We guarantee a credit score and timeline.