What do applying for a mortgage, financing a new car, and opening a new credit card have in common? An influx of pre-approved offers and solicitations from creditors, lenders, and insurance companies using data provided by the credit bureaus.

 

The practice is being challenged by a bill currently making its way to Congress, but there are three ways to prevent credit bureaus from selling your information to other companies in the meantime. 

 

How Does it Work and Is This Practice Legal? 

 

When you apply for a loan, a credit report is drawn, and this action triggers an inquiry. The credit bureaus are made aware that you are searching for a loan and may notify other lenders who subscribe to these alerts. 

 

This so-called marketing tool is known as a trigger lead, and unfortunately, the practice is well within the limits of the federal law as long as the offer of credit meets certain legal requirements. 

 

“Protecting Consumers from Abusive Mortgage Leads Act” 

 

House Resolution (H.R.) 4198, the “Protecting Consumers from Abusive Mortgage Leads Act,” is a bill that would prohibit trigger leads for mortgages unless one of two criteria are met: 

 

• A consumer has given their permission 
• A third party submits documentation confirming a current relationship, relating to credit, servicing, or other financial services 

 

Community Home Lenders of America expressed their support in a letter, outlining additional suggested amendments to a handful of the bill’s provisions, including its third-party submission proposal; eligibility standards that state “any” financial firm with a current relationship to the consumer will be notified of a pulled credit report; and the ways in which a consumer would notify their lender about opting out of trigger leads. 

 

The bill was introduced into the U.S. House Financial Services Committee in mid-June and is awaiting debate at the time of writing. If the bill is favorably advanced out of the committee, it can then be deliberated in the House. 

 

How to Opt-Out of Trigger Leads

 

1. Opt–Out for Five Years Online

 

For the best protection against unsolicited offers, including those made by phone, email, or traditional mail, there’s a simple way to prevent credit bureaus from selling your information.

 

Using the Opt-Out Prescreen website, www.optoutprescreen.com, you can submit your request to be removed from the bureaus’ distribution lists. 

 

Once your request is submitted and processed, you will be opted-out for the next five years. After the term has passed, you will need to submit a new request to extend your selection. Please note that this opt-out process will not eliminate trigger lead calls and emails, but it will reduce them dramatically.

 

2. Opt-Out for Five Years via Phone 

 

You can call the toll-free number, 1-888-5-OPTOUT (1-888-567-8688), to submit your request. This method is also good for five years.

 

You will be asked to provide personal information when opting-out, regardless of which method you use, including your telephone number, name, date of birth, and Social Security number. The information you provide is confidential and will only be used to process your request.  

 

3. Opt-Out Permanently by Mail

 

The mail-in option is the only way to opt-out indefinitely. The Fair Credit Reporting Act (FCRA) mandates that the opt-out process must be accompanied by a signed “notice of election.” 

 

You’ll still need to submit a request via the opt-out website, but it will instead generate a form for you to print out and mail. 

 

After your form is received, you should no longer receive pre-approved offers from lenders, creditors, or insurance companies sourced with information from a credit bureau. Unfortunately, it may take some time for the offers to stop completely, as many companies will continue to use information for an extended period of time. 

 

Final Thoughts

 

The Opt-Out Prescreen is required by the U.S. Congress under the Fair Credit Reporting Act. Because of this, whether you opt-in or opt-out of these offers will not affect your ability to apply for or receive a loan. 

 

Opt-out requests are typically processed within five days, but it may take up to 60 days for the offers to cease. If you have a joint mortgage, both parties will need to opt-out.