If you haven’t applied for a mortgage in the past six years, you may be unfamiliar with the new lending standards. Back in the mid-2000s, people with credit scores as low as 580 could qualify for a mortgage – but things have since changed. If you want to qualify for a mortgage loan today, most lenders require at least a minimum credit score of 680. This is not a problem if you have a perfect credit report and a good credit score. If you also have sufficient income and adequate upfront cash, you’ve got your foot in the door.
But what if your credit report reveals mistakes that have damaged your score? While these errors are not your fault, they can kill a mortgage deal. Sure, you can contact creditors and the bureaus to dispute and remove errors, but this can take months. Fortunately, there is a faster way to clean up your credit and qualify for the mortgage that you deserve: rapid rescoring.
What Is Rapid Rescoring?
Rapid rescoring can quickly correct any credit report errors, such as fraudulent activity, and can also be used to update your credit report after you pay off a major debt, such as a car loan or a credit card balance. What’s so attractive about this process is that it’s much faster than working with the bureaus directly – updates are typically completed within three to seven days. Rapid rescoring is primarily used to help you qualify for a mortgage loan or obtain a better mortgage rate, but it can also be used to assist your efforts in qualifying for an auto loan.
For a fee, a rapid rescoring service or your mortgage originator completes the rapid rescore and reports the results to the bureaus. Credit report adjustments can add points to your credit score, which can make the difference between a mortgage approval and a mortgage rejection. And since your credit score plays a role in your mortgage interest rate, raising your score by a few points may help you acquire a lower rate and a cheaper payment. However, you cannot contact a rapid rescoring service to simply run a rapid rescore for you – your lender or broker will connect you with the service.
What a Rapid Rescore Can Correct
By means of rapid rescoring, erroneous negative items like a collection account, judgment, bankruptcy, foreclosure, or repossession can be deleted from your credit report.
Let’s say you have a 660 credit score and a mortgage lender denies your application. The denial may come as a surprise, and upon further investigation, you discover a major error on your credit report – perhaps a judgment reported in error. Correcting this mistake can add 30 points or more to your credit score, which then qualifies you for the mortgage. Now you have a choice: You can wait for a creditor to update your record, which can take several months, or you can work with a rapid rescoring company. Both options ultimately result in a credit report update, but rapid rescoring is a faster approach.
In the case of identity theft, creditors may acknowledge the fraud, yet it can take the bureaus months to remove unauthorized accounts from your credit report. In the meantime, your credit score suffers and lenders postpone approving your loan applications. Using rapid rescoring swiftly erases damage caused by identity theft and errors.
What Rapid Rescoring Cannot Do for You
Rapid rescoring only works if there are erroneous negative items on your credit report. If you’ve filed bankruptcy in the past or have experienced a foreclosure, rapid rescoring will not eliminate these items from your history. These items will remain for 7 to 10 years. In fact, you have to provide the rapid rescoring company or your mortgage originator with evidence or documentation that an item has been reported in error, such as a letter from the creditor that made the mistake.
Advantages of Rapid Rescoring
- It Is Faster Than Traditional Credit Repair. If you detect a credit report error, you could submit a dispute letter to your creditor and then wait to have the mistake acknowledged and your report corrected. However, if you work with a rapid rescoring service, you can fix your credit report in less than a week. Besides, if a credit reporting error occurs right before you’re scheduled to close on a mortgage loan, you can’t afford to wait a few months.
- You Can Qualify for a Better Interest Rate. Even if you meet a lender’s minimum credit requirement, you may not qualify for the best interest rate. Applicants with scores of 740 or higher typically obtain the best rates, and if a mistake on your credit report prevents a prime rate, rapid rescoring can help. For example, if you’re purchasing a $250,000 house, a lender may assign a 5% interest rate due to an erroneous negative item on your credit report. But if you remove this error, you may qualify for a low 3.9% interest rate – that’s a difference of $150 each month.
Disadvantages of Rapid Rescoring
- You Can’t Get Rapid Rescoring on Your Own. Unfortunately, you cannot call a rapid rescoring company yourself to ask for help, as these companies work specifically with lenders and brokers.
- Lenders Cannot Guarantee Results. A rapid rescoring company may successfully remove an error, but it can’t guarantee that the removal of this item will provide enough points for you to qualify for a mortgage or better rate.
- Availability Is Limited. Rapid rescoring doesn’t work on every type of financing. If you cannot qualify for a personal loan or a credit card, your creditor isn’t likely to recommend this service. Typically, rapid rescoring is reserved for mortgage loan approvals, but is possible for auto loans as well.
- There Is a Fee. For every item that’s updated or removed from your credit report, rapid rescoring companies charge an average of $50 per item for each credit bureau they report to. For example, if you use rapid rescoring to remove an erroneous collection account, as well as update your credit report after paying off a credit card, you can pay as much as $300 for both adjustments if the error appeared on all three credit reports (Equifax, TransUnion, and Experian).
- It Does Not Work Unless the Creditor Acknowledges Its Mistake. You may believe that an error occurred on your credit report, but if the reporting creditor doesn’t admit to its error, rapid rescoring will not work for you. For instance, say you have a 30-day late payment on your credit report. You can argue that the payment arrived on time, but if your creditor doesn’t have a record of a timely payment and you can’t provide any proof, the creditor may deny the error. In this case, you can’t use rapid rescoring.
The experience of buying a home can be stressful, and being rejected for a home loan due to situations beyond your control just isn’t fair. However, rather than sit back and complain about your misfortune, discuss rapid rescoring with your lender. You might be able to improve your credit score by fixing errors and paying off accounts. Not only could this qualify you for a mortgage loan, but a higher credit score can open the door to future financing opportunities as well.
Have you ever had an experience with rapid rescoring?