Credit & Rescoring

Secondary Use

To address the practice of electronic file sharing in the automated underwriting process, the three national Repositories (Experian, TransUnion, and Equifax) require that all mortgage credit reporting agencies comply with specific procedures to track and report Secondary Use of consumer data by lenders.

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The reseller agreement from the repositories states that each purchased credit report is for one-time-use only

Secondary Use occurs when a lender or broker provides all or any portion of the consumer credit information contained in a merged or single credit report to an entity other than the end-user for which the credit report was originally prepared. In addition to secondary use reporting requirements, each of the three repositories charges an additional fee for each secondary use.

Frequently Asked Questions

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Secondary use of consumer credit data occurs when the originating end user (lender or broker) provides the consumer credit report, or any portion thereof, to a third party business entity or person (typically a sponsoring lender).
 
Example 1: Mortgage brokers who order a credit report and then deliver a copy of that report to a wholesale lender.
 
Example 2: Lenders who order a credit report and then request a copy of that report be sent to Desktop Underwriter.
The 3 national credit bureaus (Equifax, Experian, and TransUnion) require that all credit reporting agencies comply with specific procedures to track and report Secondary Use of consumer data by lenders. These Secondary Use Inquiries (SUI) policies were designed to address consumer privacy rights, Fair Credit Reporting Act (FCRA) compliance, and data security issues.
No; the reissue of a consumer credit report to a lender only effectively transmits the report data to the lender, so the consumer’s credit report is not re-accessed by the receiving party. In addition, all secondary use inquiries are considered to be “soft” inquiries which by nature do not affect the consumer’s score.
Example Scenario 1: If your CRC charges a fee to use a Reference Number in Loan Product Advisor, you will be charged that fee for each Reference Number you submit.
 
Example Scenario 2: If you submit/resubmit a loan to Loan Product Advisor with the Merged Credit box selected, the CRC may charge you for a new merged credit report unless the Reference Number is also entered.
 
Example Scenario 3: You will incur a fee for each request of fresh credit in Loan Product Advisor, and the credit repositories will identify your inquiry on the borrower’s credit report. If the new credit has a negative impact to the assessment, you cannot subsequently request to use the original credit. Check with your selected CRCs for the price and applicability of their merged credit fees.
 
PLEASE NOTE: The repositories will identify all entities that view a borrower’s credit data in Loan Product Advisor on the borrower’s credit report.
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