CRAs selling to your creditors

Debt collectors can pay CRAs to to notify them if certain activities take place on a consumer's credit file, such as changes in addresses, inquiries (pulls), etc. Presumably, the CA would already have to have a tradeline on that report, or have permissible purpose. If you go to the CRA sites, you will see the services they offer to that industry.

More recently, some companies buy from the CRAs lists of consumers with recent mortgage inquiries, and market them to other mortgage brokers, who use them to try to sell mortgages to those consumers. It would appear that those same lists might be of use to debt collectors, although I have not seen anything publicly on marketing them for that purpose.

When a lender is pulling merged reports in considering a mortgage application, they, or the company preparing the merged report, might check with the creditors to determine the current status of any debt.

There have been sporadic reports of consumers applying for a mortgage, finding no negative items on their reports, but a few weeks later, some bogus debt pops up just before closing, and the lender requires that it be paid off before the mortgage will be funded.

A CA might have permissible purpose to get information on consumers whose debts they are collecting on, and a mortgage lender might have permissible purpose to obtain selected consumer's header information based on mortgage inquiries for purposes of "making a firm offer of credit", but providing lists of consumers with mortgage inquiries to a CA, without regard to whether that CA had a specific collections permissible purpose to have that information, would be a clear violation of FCRA. An intermediary matching CA collection account lists against such PRM lists should also run afowl of the law.


There was one thread on this site, about 9 months ago, where a home buyer ended up paying several thousand dollars to 2 CAs on 2 "debts", one of which the alleged OC (a dentist) agreed he had never been a customer, and the other on a medical debt where the consumer had documentation of paying that doctor, but no records from the original creditor were accessible due to a hospital sale and reorganization. The consumer cut his losses and paid to make sure the mortgage and home purchase went thru, as the costs of delay would have been substantial.

In this case, there was no sign of either debt when he initially reviewed his own reports, nor would he have expected either "debt" to be outstanding. The collections TLs showed up after the mortgage lender had pulled a first set of reports, when the lender pulled a second set in preparation for closing.

Was it just chance that both showed up at that time, including one that was at a minimum misidentification, and never his debt? Or did both of these CAs have access to mortgage pull information, then "match" it against accounts they had and pull those reports, to determine which "John Smith" they were going to collect from, figuring that even an approximate name match would give them a good chance of payment from a consumer who could not afford to spend months in "validation" or litigation. Essentially, he was ambushed and forced to pay thousands of dollars he did not owe.


What lesson can we learn here? Probably that if you have significant dollars at stake, you must be prepared and willing to find and use a competent attorney quickly if the rats come out of the woodwork. The law alone will not protect you unless you are willing to follow thru and fight back, and there are people in this world who make a living on that.