If you receive a mortgage loan offer in the mail, chances are the offer is the result of a prescreening process. Lenders prescreen “raw” data made available by the credit bureaus. Without viewing personal information, lenders are able to identify potential customers. These customers may qualify to receive loan offers based on their credit report. Based on this prescreen, the lender will then purchase the names and addresses of those customers who they wish to offer a mortgage loan.
Lenders are required by law to make a valid offer to those customers whose information they have purchased. This prescreen is considered a “soft” credit check or an inquiry, and will have no impact on your credit score. While this valid offer may say pre-approved it does not mean you are guaranteed a loan. The amount and terms are based on a full review of your credit report. When you respond to an offer the lender will ask for permission to view your actual credit report. This is necessary step in order to check your current credit score. The view any outstanding debt and view your payment history. All of which are critical to qualify you for a mortgage.
What Happens Next – Trigger Leads
When you apply for a mortgage and a credit check is run, your account is flagged and packaged by the major credit bureaus and sold to lenders who are willing to pay anywhere from $25 to more than $100. These “trigger leads,” as they are often referred, since running your credit report triggers them, include your name, credit history, your FICO range, as well as your address and phone number. They result in unwanted phone calls and mail offers that are in no way related to your realtor or the lender you may be working with to secure a mortgage. Unfortunately as a trigger lead, you as the consumer are at the mercy of these too-good-to-be-true offers that reflect badly on honest mortgage professionals who respect your privacy and your personal data.
It’s important to have a trustworthy and professional mortgage specialist. Especially when making one of the biggest financial decisions you will ever face. Don’t be lured by the rate alone. Where you find the lowest rate advertised, you’re likely to find the highest fees. Always, look for with a lender that has your best interests at heart.