Opting Out increases credit score by a few points. Myth or truth?

[kysin2014]

I have heard so much talk from loan officers, friends, etc. suggesting that I should opt-out to both increase my credit score a little bit and to reduce mail fraud by not having credit card offers in the mail.  Is there any truth about the credit score slightly going up from opting out or is it just a myth??  The place to go is: www.optoutprescreen.com

Thanks,
Jason

[Anonymous]

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@jinswaz wrote:

I have heard so much talk from loan officers, friends, etc. suggesting that I should opt-out to both increase my credit score a little bit and to reduce mail fraud by not having credit card offers in the mail.  Is there any truth about the credit score slightly going up from opting out or is it just a myth??  The place to go is: www.optoutprescreen.com

Thanks,
Jason

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Hi jinswaz!

No, opting-out does not weigh into your credit scores at all. What opting-out will do is prevent the CRAs from selling your name on lists to for to prospective creditors (credit card companies, insurers, etc...). AND, if you're in the process of rebuilding, it curtails the CRAs from tipping off the CAs that you're paying off debt. <-- This is why we recommend that you opt-out before starting your credit rebuilding journey.

[Anonymous]

^--- this.

Right as you start getting back on your feet, the JDBs will want to knock you back down again.   Going OPTOUT makes you more invisible to what are called "credit triggers".    Debt collectors subscribe to credit triggers just like marketing companies do--looking for signs your credit is improving for the better.  This means your ability to pay has probably gotten better so their chances of collection look better, so your old dead account that's been re-sold 3 times now gets moved to the top of the collections pile, and the calls and letters start all over again, no matter if the debt is out of the statute of limitations for your state or not.

It can be YEARS down the road and you could get old trash pop back up on your reports, sometimes regardless if you opted out or not.

If your credit scores are in the 600s or lower, you aren't going to get any decent solicitations in the mail as it is---most of the stuff you'll get at that credit score level will be scams with very high interest rates and fees and lousy insurance offers.   Save some trees and stay on OPT-OUT for the next several years.

There are other kinds of triggers though that can awaken JDBs.  If you move and change address, the USPS sells a data file called the NCOA (National Change of Address), and this event might cause the JDB to locate your dead account and start collections again.   They figured if you moved to a different apartment or house, you've scrounged together enough money to pay for security deposits--they'll go after you again.

For people who love a good fight, if you're dealing with nasty collectors who violate state and federal laws, there is one strategy you can do with OPT-OUT called the "mortgage fakeout".   You go back to OPT-IN, then act like you're applying for a mortgage and take on some hard mortgage inquiries (fill out a mortgage app on Lendingtree or BOA's site, etc).    This will broadcast to the world who is listening that you're seeking a mortgage, and it's likely to wake up any JDB's listening in the woodwork, and they'll pile on to your credit reports within the next 2 months---generally the time it takes to close on a mortgage.

Once you've snared some JDBs, you can go back to OPT-OUT and then wait to see what violations the new collectors do, then file suit to scare them off.    If your debts are still within SOL you shouldn't do this.   It's only really useful if all your debt is out of SOL, and you have more than a year out before you're ready to get a mortgage for real.

[Anonymous]

thanks phillyguy!  great info.  i am now opted out.

[llecs]

There are dozens of horror stories in here of borrowers-to-be who applied for a mortgage and got piled on with CAs. It can't be said enough: OPT OUT!!!

[Kiwill]

Last week I made sure to OPT-IN bugt after reading this, I just decided to OPT-OUT again. 

[larinoriani]

Always the other side of the coin...In my case, I started paying off CCs balances back in june (paid off about 85% of my balances), and I was looking for a way to be done with the leftover 15%.My scores bumped up from around ~690 to ~740 in three months, and started getting pre-screened offers from premium cards for 0% APR and BT for 15 months, I app'd and got approved with my highest CL ever. Now I have transferred my two last balances to that card and will finish it up much earlier thaatn I thought possible, and payin gno interest!

So in my case it was on my benefit to be opted-in. I can now opt-out

[haulingthescoreup]

Exactly. It can be very useful when you've improved your credit profile and you want to catch the attention of lenders.

It can be disastrous when you're going for a mortgage, and the CRA's sell your demographic info to zombie debt collectors (that's how they find you), and they find some old account that might or might not be yours and slap you with a collection two weeks before closing. That's when you definitely want to be opted out.

Don't remember if it was mentioned above, but opting out will generally make pre-approval websites useless. My feelings were really getting hurt back when I first tried pre-approvals and got nuthin', until I realized that it was because I was opted-out at the time.

It often takes a while both to opt in and opt out, so it's not a switch that you can flip one day and flip again two days later. Not with any assurance of success, that is.