We’ve all been there: You are going through your mail, and find several pieces of mail from credit card companies, mortgage lenders, and others. “You’ve been preapproved!”, the letter screams out. “Earn 1 million travel points!” another offer promises (what they forgot to mention is that you can only trade in those 1 million points for a 5 minute Uber ride). Perhaps you pause to read over the letter a bit more. Or perhaps, if you are like me, you simply throw the letter in the trash, never to be seen again.
Why do you keep receiving these letters? Equifax, Experian and TransUnion (the three major credit bureaus), work with lenders and insurers, to provide lists of consumers who meet certain credit criteria, and send those people offers. These offers are not final or guaranteed, meaning, you still have to apply for the card, loan or insurance policy, and obtain final approval, although your chances are relatively strong.
It is possible to opt out of these preapproved offers (we’ll go more into that later). For the reasons laid out below we suggest that you do so (and, if you are a lending, real estate or insurance professional, encourage your clients to as well).
Bad Offers: Typically, the offers you recieve in the mail, are not the most competitive or worthwhile offers, for your credit profile. Instead, lenders reach out to those whom they think are desperate to obtain a card or loan, any card or loan, and hook them in. The most desirable loans and credit cards for your credit profile rarely need to send you anything by mail because, because you will seek out these excellent lending options on your own. Life is too short to waste time with irrelevant offers.
Identity Theft Risk: After the recent Equifax data breach, concerns around the security of credit data are stronger than ever. Our data often isn’t secure. For that reason, why have your personal information possibly floating around online, being submitted and tracked through various databases for preapproved offers? While credit bureaus would likely argue that use of data for preapproval purposes does not place us at identity theft, why take the risk? Opting out adds another layer of protection to your data.
Protection From Debt Collectors: Quite often, debt collectors subscribe to prescreened lists, trying to keep an eye on whether your credit score is improving. If they see that you are in the process of rebuilding credit, they might step up collections efforts on old debts, making frequent phone calls and sending letters, while (if they haven’t already), reporting collections to credit reporting agencies, which further damages your credit. If you opt out, debt collectors won’t be able to find out your credit data via prescreened lists, which reduces the risk of aggressive collections actions, and any additional hit to your credit.
How To Opt Out: Opting out is simple. Simply visit www.optoutprescreen.com, and either opt out of prescreened lists electronically, which lasts for five years, across all credit bureaus, or permanently, which is done by mail. Opting out is one of the quickest, simplest ways to protect your credit – starting today.
Shiva Bhaskar is an experienced consumer credit attorney, and the cofounder of Tier One Credit (www.tieronecredit.com), a credit consulting firm dedicated to helping every American enjoy the best credit score possible. Shiva can be reached by email at [email protected].
