Rapid Rescore May Increase Your Credit Score Fast
Written by: Kristy Welsh
Last Updated: September 25, 2017
Imagine this — you are getting ready to close on your home loan when your loan officer calls to say your credit score went down 20 points from when they originally pulled your credit. A 20 point decline means the difference between putting 10 percent down on your loan to now having to come up with 20 percent. Unfortunately, you don't have that extra money because you scraped the initial 10 percent together and now you are tapped out. What are you going to do?
Your loan officer says, "Let's do a rapid rescore to get your score back up." If you are like most people, you have no idea what he is talking about nor do you even know what a rapid rescore is or if it will even help you. We are here to tell you it does work but you need to know the in's and out's of this procedure before you agree to have it done.
What is Rapid Rescore?
Rapid rescoring is just what you might think it sounds like, a rapid way to adjust your credit score. What might take 30 days or more, can take 3 to 7 business days. A rapid rescore is essentially an immediate updating of your credit file.
If you try to dispute a legitimate error on your credit report with the credit bureaus, they have 30 days to investigate the dispute and get back to you with their answer. This is far too long to wait if you are trying to finalize a mortgage loan when there are contractual deadlines that need to be met. If you have to wait for the credit bureaus to get back to you in 30 days, chances are your whole deal will probably fall apart.
So, instead, what your loan officer will do is provide the proof to the credit bureaus that the errors are bogus and have them immediately recalculate your credit score. This can all be done in a matter of a few days.
Disputing erroneous information is not the only way you can increase your credit score. Say for instance you have a high balance on one of your credit cards, your loan officer can run what is called a "what if" simulator. Basically, this mathematical simulator used by mortgage companies can determine "what if they paid off their credit card, how much would this increase their score." If the loan officer sees this might increase your score enough to get you that better loan, they can suggest you pay off this credit card or pay it down below 30 percent of your credit limit. Once you pay down your card, you can print off your new balance and this can be submitted to the credit bureaus for an immediate update.
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Is Rapid Rescoring the Same as Credit Repair?
Doing a rapid rescore is not the same as credit repair for a number of reasons. First of all, rapid rescoring should only be done through a mortgage broker or lender and is not offered by credit repair companies. It will typically cost between $25 to $30 per updated account and this fee should be paid by the lender or broker. This is because according to the Fair Credit Reporting Act, borrowers are not allowed to be charged for disputing inaccurate information on their credit reports. So, if the borrower paid for a rapid rescore, that would be in violation of the FCRA.
Secondly, you can only dispute inaccurate information when you have acceptable supporting documentation indicating a change in your credit report. Rapid rescore is not a means of disputing negative but accurate information such as late payments, foreclosures, bankruptcies and the like. For instance, you can't pay off a delinquent account and expect it just to fall off your credit report. Having that done takes a lot more effort than just sending in the paid off information to the credit bureaus, something like that needs to be handled with the collection agencies first.
Reasons a Lender Might Suggest Doing a Rapid Rescore
The bottom line as to why a lender may suggest doing a rapid rescore for you — to close on a loan you might not otherwise qualify for in the first place. Which in the long run means money for the lender and getting a better loan for their customer.
As stated before, mortgage brokers or lenders are the only ones who should be providing rapid rescores. According to a Rapid Rescoring website which provides lenders this service, here are some of the steps you may need to follow:
- Find out how many points you need to qualify for the better loan program.
- Which one of the three credit bureaus do you need contact to raise your score. Since all three bureaus will have different scores, which is the one hurting you?
- Run the "score simulator" associated with the program your lender is using. This will lay out what you need to address to raise your credit score.
- You as the borrower will need to address all the suggestions that came out of the "score simulator" and give this completed documentation to your lender. Be it a new balance on your credit card or maybe some other documentation to support the new information.
- Your lender will provide this information to the credit bureau and you should get a new credit score 3 to 7 days later.
In the eyes of the lender, doing a rapid rescore for you is not an inexpensive procedure but they will make it up in the revenue they receive from closing the loan. In the end, rapid rescoring can be a win-win situation for the borrower and the lender. Just remember, this is not a form of credit repair and there may be some negative issues still lingering on your credit reports. To remove those final few blemishes, you will need to follow our tips on credit repair or hire a credit repair company to do it for you.