by Jeffrey R. Lipes

As a first-time homebuyer, one of the best pieces of advice is to get prequalified for a mortgage before you start looking for a home; however, before you call or visit your mortgage broker or banker, you take one important step to protect your privacy. If you do not take this step, once the mortgage lender pulls your credit report, your name will be sold by the credit agencies to numerous companies wanting to solicit you for business. Prior to getting prequalified for a mortgage, you need to Opt Out, so the credit reporting companies will not be able to sell your name.

Just like being on the Do Not Call list preventing those irritating phone calls during dinner, the Opt-Out Prescreen can stop unwanted junk mailers, one of the leading causes of identify theft. It may also reduce the number of unwanted phone calls you receive.

Every time you apply for credit, your name is sold to other lenders or companies that sell and resell names and personal information. The mortgage broker or banker does not have any control over stopping your name from being sold unless you take the necessary steps to Opt Out.

Here is all you need to do: 

1. Go online to www.optoutprescreen.com. The consumer credit reporting industry has provided a way to opt out and remove your name from these lists. 
2. Choose either the Electronic Opt-Out for Five Years or the Permanent Opt-Out by Mail 
3. The site will then ask you for certain personal information for you to Opt Out. It is the official site for Consumer Credit Reporting and is overseen by Equifax, Experian, Innovis, and TransUnion.
4. You also may contact the service by phone at 888-567-8688.
5. You must opt out at least five days prior to having your credit checked to make sure the opt-out request is processed in time. If you do not opt out, the companies that purchased your name will aggressively contact you to try to get you to do business with them. Bait and switch tactics may be used to attract clients away from the original lender.

Many customers believe that the original lender has broken the privacy law, when they cannot understand how they get calls and mailings immediately after providing the lender with personal information, but this is just not the case.

If you are tempted by one of the unsolicited mailers your receive or a phone call you get, remember that each time you apply for additional credit, the lender will need to pull another credit report for underwriting. Every time you have someone pull another credit report, your credit score drops.

Once you purchase your first home, you need your mindset to be on saving money and not taking on additional debt. At this critical time in your life, many lenders and banks will encourage you to take on more debt. Opting out can reduce or eliminate the fancy marketing gimmicks of these lenders and eliminate your impulse to take on additional credit.

Usually the first home you purchase is a stepping stone to a larger home as your family needs grow. There will be enough new expenses that will require you to take numerous trips to the hardware store, the drapery store, or the paint store. By concentrating on saving money instead of taking on additional debt, you will be able to build wealth and increase your family’s net worth in a shorter timeframe.

Take action and opt out; and spread the word to your family and friends.

Jeffrey R. Lipes is president of Family Choice Mortgage Corporation and is on the Board of Directors for the Connecticut Mortgage Bankers Association, Inc.