Say you applied for a mortgage but your credit score was just a
few points shy of getting approved or getting the best possible interest rate
due to an error on your
credit report or a high balance. If you tried to fix the
error or paid down the balance, it could take several weeks for your credit report to be updated
through the normal channels.
With rapid rescoring, you could potentially improve your scores
for a mortgage within a few days. “If I paid down a credit card today, it might
show up on my credit report 6-8 weeks from today,” says 50StatesLending.com. “Rapid
rescore is simply a matter of providing documentation to the credit bureaus to
get them to update information and shorten the normal reporting timetable.” An
updated score is typically generated within about 72 hours, according to
50StatesLending.com.
Loan originators look at your
credit score from Equifax, Experian, and TransUnion, then base your eligibility
and interest rate on your middle score, ignoring the high and low score. That
means you’d only need to have the median score recalculated instead of
recalculating all three.
Before going through the rapid
rescore process, they will run a FICO simulator to estimate how much your credit score could
be improved by paying down a balance or making other changes. The impact of a
rapid rescore varies depending on what derogatory items were on your credit
report, but 50Stateslendng.com says it could save a consumer thousands of
dollars in interest over the course of a loan.
However, it’s important to
note that a rapid rescore is different from credit repair. Credit repair is a
separate process that often involves a third-party company disputing derogatory
items on your credit report that may or may not be accurate. With a rapid
rescore, you’d need documentation that you’d actually paid off a high balance
or collections or that an item on your credit report was reported inaccurately.
Unless your median credit
score already tops 740 (the cut-off credit score for the best interest rates),
it’s probably in your best interest to consider a rapid rescore. “That low
score is increasing the cost of the mortgage dramatically,” says
50StatesLendin.com.
Courtesy of 50StatesLending.com
