I am astounded at the information I have obtained in the recent past regarding how the lending process works behind the scenes and how many Americans are being taken advantage of without their knowledge.
Did you know? When you apply for a mortgage from a lender and they explain the process to you for determining the rate which they are going to offer you they will state something to the effect "We run your credit report with the three major credit reporting agencies and then average the scores, blah, blah, blah to determine your rate" Ever hear something like that? Of course you have. What they do not inform you of is that they use a "third party company" which accesses the database of the three major credit reporting agencies, then takes the data and runs it throuth their own formulas and comes up with an independent credit score that may, or may not, be close to that of the 3 major CRB's.
I had a client who had impeccable credit with not a single payment ever late and when we received her credit scores from the big three she had an average score of 760 with one of the scores reporting in at an impressive 780 score. Well, guess what? When the mortgage lender ran the report (on the same day) he was astounded and confused that her average score was a 660. I asked him how that could be, and he stated that there was no way that could happen. He had no answer.
As I am in real estate for many years I called some of the other lenders I have been associated with over the years and and finally found one who was aware of how the system works. Evidently it is a closely guarded secret as these loan officers are honest hardworking people and in this case they were as much in the dark as everyone else. I will likely get little response to this posting as I am not targeting a specific company, but this type of manipulation needs to be exposed. If they are going to operate this way it should at least be disclosed.
Secondly, if the third party is going to adjust your rates in the future based upon current loans being considered that also should be disclosed. This second part addresses how the scores became lowered over time. The applicant had purchased sevferal homes over a period of about two years and had not noticed that every time she purchased a home her score had been lowered by the previous purchase, not in the big 3 but with the 3rd party. For the few that are aware of this I would like additional data or information you might have. I wish I could find the name of the person I heard on talk radio in Houston a few months back who claimed this is "the biggest rip-off of the American public existing today. Let me hear from you.
And by the way, the credit card companies have their own third party.
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