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Hard Credit Pulls versus Soft Credit Pulls

There is a new battle in the consumer information arena. When a consumer allows a hard credit pull, they are inundated via mail, calls, and texts about new credit offers. That’s because Equifax, Experian, and Transunion sell those hard credit pulls as a sales trigger, and they make millions of dollars of these sales each year. The three credit bureaus—Equifax, Experian, and TransUnion—are legally allowed to sell your name, FICO score, phone number, and other pertinent data once your mortgage professional has pulled your credit report. Within 24 hours of a credit pull, you could be stuck fielding calls and junk mail from companies trying to sell you mortgage-related services. The three credit bureaus have created a de facto marketing department for mostly large mortgage companies willing to pay upwards of $30,000 a month for these lists.  Experian’s Prospect Trigger Report provides your client’s name, FICO scores, phone number and other pertinent data as fast as 24 hours after you pull your client’s credit report. By contrast a soft credit pull contains the same information including a score but does not count as a pull, will not impact scores, and will not set off a sales trigger. The property casualty insurance industry has used soft pulls for years to help determine eligibility. Earlier this year the credit repositories announced they were going to sell soft credit pulls also but met with a mountain of criticism from the mortgage industry, insurance industry, and consumer groups. They have only temporarily shelved the plan.

Paramount Residential Mortgage Group and Federal National Mortgage Association (FNMA) have agreed to pilot a program using a soft tri-merged credit report containing all the same information as a hard credit pull including credit trending data and allow us to use FNMA’s desktop automated underwriting system to obtain initial approvals for borrowers. It’s called DU Early Assessment. We will still be able to send approval letters to the borrowers and their realtors using this system. The advantage to a borrower is the soft pull will not impact their scores and allow the PRMG to still obtain an initial approval, the borrower will not be inundated with calls, texts, and mail about credit offers.  We will sometime in the process still need to do a hard credit pull to finalize the underwriting approval but later in the process which should offer some relief to beleaguered consumers.

In the meantime, I would encourage everyone to go to www.optoutprescreen.com to request your information not to be sold as a trigger lead to credit grantors.

 

Stuart Peisner is a licensed mortgage loan originator with over 30+ year’s-experience and works for Paramount Residential Mortgage Group a national mortgage banker. For more information please call me at 407-230-6510 or email speisner@prmg.net.

 

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