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What Are Credit Bureau’s And Why We Real Estate Skip Tracing Data Companies Use Them?

by | Mar 26, 2019

Real estate investors and salespeople are relying more and more on data to target their audiences while identifying where their best prospects are.

The best kind of data that many of these investors can find usually comes from skip tracing, which relies on credit data to work. This data comes from credit reporting, which comes from credit bureaus that gather up-to-date data on borrowers.

Here, we’ll discuss what credit bureaus are, and why real estate skip tracers use them.

 

What are Credit Bureaus?

When individuals use credit, get credit,  and pay (or fail to pay) their debts, it is collected on a series of reports that help companies determine the credit worthiness of an individual.

For example, when a young person applies for credit, they don’t have much of a report, which means they are only eligible for certain kinds of credit. Conversely, someone who has had several kinds of credit for years—and who has paid them off regularly—have demonstrated that they are a safer investment for credit companies, and these individuals will get special rates and deals.

Credit reports, as a record of your credit history, helps lenders determine your risk. Your entire history in terms of lending or credit cards (including mortgages, car loans, school loans, credit cards, and other forms of credit)is on your report.

Credit bureaus compile credit information on borrowers and provide reports on their activity. These companies often assign a rating, or credit score, that tells lenders how risky that individual is. Borrowers with lower scores will find it harder to borrow money for a car, or get the best interest rates on mortgages or credit cards.

The most well-known credit bureau’s in the United States are Equifax, TransUnion, and Experian. However, there are hundreds of other bureaus in existence.

 

 

What is Real Estate Skip Tracing?

Skip tracing is a common tactic of tracing down individuals who have stopped paying debt. The term comes from the old colloquialism “skipped town”… this form of tracing literally helps people track people who have left town.

The reason this kind of searching is important is because individuals who owe debt, for example money on their property, don’t leave behind clues as to where they are, and they will take many precautions to hide their location. That means changing phone numbers, moving to new apartments or houses, and paying for thing with cash.

Finding people who changed jobs and stop using credit makes them incredibly difficult to locate. What makes it more difficult is that these people will not want to be found, and will only be found, once a collector or law enforcement corners them.

Some real estate buyers also use skip tracing tools to find homeowners who defaulted on their homes, and get great prices on seized properties.

 

Why are Skip Tracing Companies Using Credit Bureaus?

Companies that do skip tracing in real estate use credit bureaus to get an accurate. picture of where a borrower has been. Credit bureaus have access to information that others do not through their reporting. Information here included

  1. Current and past addresses.
  2. Current and last employers.
  3. Current lines of open credit.
  4. Charged-off credit lines.
  5. Credit score.

When skip tracers are looking for a borrower, they can use the credit report provided by a bureau to locate that individual. This serves a huge purpose for credit companies looking for borrowers who default.

However, real estate companies can also use skip tracing to determine when people default on a home. When this happens, that home can go on an auction and sell for pennies on the dollar.

Furthermore, real estate investors can locate individuals that are owed large sums of money or property due to inheritance, and compile information for their marketing efforts.

 

Conclusion

Skip tracers are using credit bureaus to locate individuals to bolster their real estate marketing efforts. They also use skip tracing to locate foreclosed properties that can be bought and flipped easily to maximize profit on house sales or rentals.

Credit bureaus play a major role in this by providing the updated information that these tracers need (through their credit reporting). This way, tracers can gather data to help real estate professionals maximize their lead generation and sales efforts.

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