The loan industry is highly competitive, with numerous lenders vying for a piece of the market. Some lenders resort to unethical practices, such as using trigger leads, to gain an edge. 

Trigger leads are a type of marketing list used by lenders to target consumers who have recently applied for credit or loans. But everyone should be aware of the dark side of this practice. 

Here, we'll discuss trigger leads, why they're harmful, and reveal how to protect your personal information from them.

What are Trigger Leads?

First, let’s identify the monster before attacking it! Trigger leads are lists of consumers who have recently applied for credit or loans. They are generated by credit reporting agencies, which sell the information to lenders looking for new customers. 

When a consumer applies for a loan, the lender pulls their credit report and scores from the credit reporting agencies. The credit reporting agencies then sell the consumer's information to other lenders as a trigger lead.

Mortgage companies commonly use them to identify potential borrowers in the market for a new home or looking to refinance their existing mortgage.

Based on this information, the mortgage company can determine if the consumer is a good candidate for a new mortgage or a refinance, leading to solicitations. 

Why are Trigger Leads Bad?

There are several reasons why trigger leads are bad for consumers. First, they can result in a flood of unwanted phone calls and mail from lenders looking to offer you their services. By flood, I mean you could be looking at over 25 calls. 

This can be especially frustrating if you're not interested in taking out a loan or trying to avoid debt. 

Second, trigger leads can lead to identity theft and fraud. This practice can only be done by purchasing YOUR information. Suppose a lender obtains your personal information from a trigger lead and uses it to open fraudulent accounts or make unauthorized purchases. In that case, it can take months or even years to clear up the damage.

Third, and worst, they are highly deceptive! These calls are designed to sound like they are a seamless part of the loan process you’re a part of. Essentially, they are baiting you to use their services in the guise of “giving you a better rate.” 

How to Protect Your Information from Trigger Leads

While there aren’t regulations in place just yet, the HR-2656 bill will pass soon, making this process illegal! But until then, what can you do? 

You can take several steps to protect your personal information from trigger leads. You could consider freezing your credit report. This prevents anyone from accessing your credit report, including lenders and credit reporting agencies. 

For something less drastic and much more straightforward, you can opt out of pre-screened credit offers. The Federal Trade Commission (FTC) allows you to opt out of pre-approved credit offers for five years or permanently. 

You can also list yourself on the “National Do Not Call Registry” overseen by the Federal Trade Commission. However, you should keep in mind that this will remove you from ALL call lists. So if there are some marketing lists you would like to stay on, this one may not be for you. 

Bottom Line

Trigger leads are a concerning practice in the loan industry, as they can lead to unwanted solicitations and a personal data breach. Protecting your personal information can reduce your risk of falling victim to this unethical practice. 

Be sure to monitor your credit report regularly, and tune into the latest episode to learn more about these practices and how to prevent them from affecting your loan process!