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Credit and Mortgage Triggers

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Until JD linked to my story about how credit cards get you in, keep you in and keep you spending, I had never heard of “credit triggers,” which is the highly profitable side business all three major credit bureaus (TransUnion, Experian, Equifax) are deep into. This article on the Daily Kos about credit and mortgage triggers gives a great recap but basically the bureaus are paid by companies to let them know when you’ve starting doing trigger-type activity.

For example, if you start paying off some of your debt, collection agencies get a ping from the credit bureaus. When this happens, they know that they should start coming after you because you’re back on your feet. While this particular aspect of the service doesn’t trouble me as you should be paying your debts, the fact that your information is actively up for sale does. Others ways this manifests itself is in the idea of universal default, where failure to pay or late payment of one debt results in an increase in rate for another, which is one of the more insidious ideas of the credit card companies; but unless the companies are actively notified, which they are in the case of credit triggers, they would never know.

This also happens with mortgage companies, which explains why I received a deluge of mortgage refinancing offers for about two months after I bought my house. I received approximately two or three refinancing offers a day! I just bought the freaking thing, why would I want to refinance!? The same exact thing happened whenever I paid off the second mortgage… two or three offers each and every single day (while I am a fan of hyperbole, that was no exaggeration and anyone who has every bought a house can attest to the tenacity of those companies).

Of course, the credit bureaus spin both of those triggers as things that help the consumer – “you can get offers more aligned with your rating, so that they will be better when your score improves!” or so “you can shop around!” Ultimately, they’re taking the cash, selling your information, and there’s not much you can do about it. The difficult part in all this is that they do the work of collecting it but the onus of keeping it accurate is up to you, this is definitely one industry I wouldn’t mind seeing nationalized and more tightly regulated (fat chance, if anyone has any political-swing money, this industry does).

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4 Responses to “Credit and Mortgage Triggers”

  1. pcooper says:

    https://www.optoutprescreen.com/ lets you opt out of a lot of that stuff.

  2. KMC says:

    I had the same reaction when we bought our house and got tons of refinance offers. I don’t get it. Why are companies paying the costs to send these mailings? I just closed a mortgage; why would I refinance?

  3. I was amazed at how many offers I got. For the worst offender (literally one offer a day, every day) I wrote them and said I will never finance with you, take me off your list. They did, thankfully. Now I’m down to about 2-3 a week.

    I was surprised, too, when one of my loans came out of the prepayment penalty period and I got mail saying “now that you don’t have a prepayment penalty…”. I guess everything is for sale in this world.

  4. girl150 says:

    So that explains why we heard from a collection agency for a debt regarding my husband’s ex-wife’s car a mere 5 years after its repossession: he and I had just applied for a mortgage. Lucky us. So glad we get to be the ones back on our feet financially, not her. Bleh.
    /rant


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