How to stop the sale of your credit info

You’re probably used to receiving a steady trickle of credit card, car insurance and other financial offers in the mail. When you apply for a mortgage, however, that trickle can quickly become a deluge of marketing phone calls, emails and letters.

Why does this happen? It’s because credit reporting companies are allowed to sell your credit information – and that’s exactly what they do. The businesses that buy your information then use it to contact you with financial offers. These are known as “prescreened”, “preapproved” or “firm” offers.

This sale of your credit details, and the solicitations that often follow, can create three problems for you:

  1. It can be annoying: The large number of calls, emails or letters you may receive can be frustrating, especially when you’re in the process of getting a loan.
  2. It can be misleading: If you’re applying for a mortgage, solicitors may falsely claim to be working with your lender, or they may use other deceptive sales tactics.
  3. It can be risky: The more people have access to your personal information, the greater your risk of identity theft.

Thankfully, the credit industry offers a way for you to block these prescreened solicitations and the trade of your credit information.

You can opt out by calling 1-888-5-OPTOUT (1-888-567-8688) or visiting www.optoutprescreen.com.

While we respect your right to manage your privacy and consider financial offers as you see fit, we recommend opting out for the reasons above. Opting out does not impact your credit scores or credit reports, and it does not affect your ability to obtain new credit.

You may choose to opt out for five years or indefinitely, and you may opt back in using the same phone number or website at any time. Opting out halts the exchange of your information for “firm offers” on all credit and insurance products, including credit cards and car insurance.

If you’re planning on applying for a mortgage, opting out earlier rather than later is usually best. Your opt-out request will be processed within five days, but it may take up to 60 days before the prescreened offers stop. If you’ll be applying for a joint mortgage, both individuals on the mortgage will need to opt out to be protected from the related solicitations. You can read more about prescreened offers and the opt out process at this Federal Trade Commission webpage: https://www.consumer.ftc.gov/articles/0127-getting-mortgage-offers

Credit Score is Key to Low Mortgage Rates and Costs

Many people are not quite sure how their credit scores affect their mortgage rate. In the simplest terms, the better your credit score, the better chance you have of qualifying for the mortgage loan that is ideal for you. This could mean better interest rates, more loan options, and lower costs.

Your credit score is also referred to as your “FICO score”. FICO is an abbreviation for the “Fair Issac Company, the developer of the original scoring model. The credit score that FICO gives you in a number between 300-850, with a higher number being a better score. The score is based on many factors, such as past late payments, debt utilization, and the age of your active accounts. However, how the final score is exactly calculated has not been released, as it is a trade secret closed protected by Fair Issac Co. It is very important that you know and understand your credit score before you start evaluating mortgage loan options.

Two Ways to Get Your Credit Scores:

1. Go to www.myfico.com and sign up to obtain your credit score directly from FICO. Be careful that even though you can obtain your score for free, you must then cancel your free trial within 10 days to avoid being charged for 3 months of service.

2. Use www.creditkarma.com. CreditKarma is a truly free way to obtain, and monitor, your credit score over time. CreditKarma is supported by their advertising partners that advertise credit cards, loan programs, and more so that you can use the website free of charge. Credit Karma also offers you advice on how to improve your credit score by analyzing the different factors that make up you total score (length of credit history, hard credit INQUIRES, late payments, etc.)

You can also get your credit report free, once per year, but with no scores, from the government sponsored website www.AnnualCreditReport.com. Beware of the many sites that advertise ‘free’ credit scores, like FreeCreditScore.com. These sites all charge you for a credit monitoring service in order to get your ‘free’ score.

Also, many of these sites do not use the FICO scoring model used by most lenders. In fact, some web based consumer scoring sites may give you a credit score based on a 500-1000 point rating vs. the standard 300-850 that lenders use. You could think you have an excellent score when, in fact, it is sub par, costing you thousands in increased costs when you go to get a mortgage loan.

It is important to note that while your credit score is a key component, it is not the only factor that a lender considers when approving a mortgage. Be sure to contact The Chaffee Team, before you shop for a new home so you know how to improve your chances of qualifying for the loan that is ideal for you.