Q. I am looking to buy a new home in the next couple of weeks and wanted to get my credit scores as high as possible. I had a large balance on a couple cards, with over 50% utilization. Yesterday, I pulled out some of the money I had in savings to pay off my credit cards in order to qualify for a better rate – I’m in a bit of a rush to get pre-qualified. Will I have to wait for my credit cards to report to the bureaus at the end of the month, or can I request that they report now? I’m guessing the difference in my score will be 30 points or so, which seems like it could be very significant for pre-approval.
A. First of all, congrats on your new home! You are correct in your statement that paying off a high utilization rate credit card will help your credit scores in a significant way.
Unfortunately, a consumer has no say on when a credit card company will update the balances reported to the credit bureaus. Reporting to the credit bureaus is a regularly scheduled electronic transaction.
You can call the credit card company and see if you can find out when the bank sends a report to the credit bureaus. I imagine it’s not an unusual question. What’s typical? Most companies report to the credit bureaus on a monthly basis. Some companies, notably Capital One, report mid-monthly as well as at the end of the month.
There is also another option: you can do a Rapid Rescore with your mortgage lender. Rapid Rescore is a product offered by many mortgage lenders and allows the updating of your credit report within a few days. If you have proof you paid off your cards, you can send it in the credit bureaus through the Rapid Rescore system and they will recalculate your credit score based on the new information. However, this option is not free. Typically, a rescore costs between $25 and $30 per updated account.
Most reputable mortgage brokers or lenders will not pass on the Rapid Rescore fee to their customers, but some may ask. How to negotiate the waiving of this fee if they ask? Your mortgage lender should have a “What If” assessment tool which allows the lender to calculate how much your score will improve if your credit card balances drop to zero. You may be able to convince your lender to not charge the fee by having them predict in advance whether or not the rescore will have a big effect for you. (Will the rescore will be worth the cost?) You might also point out that it may be to the lender’s advantage to rescore you as they are paid on a percentage basis of the loan and a higher score may mean you can qualify for a bigger mortgage.