Rapid rescoring can help you improve your credit score within a very short amount of time, which in the case of a mortgage loan approval, could mean the difference between thousands of dollars with a lower interest rate. What is rapid rescoring and how will it benefit you? Here’s a look at the process.
How Does Rapid Rescoring Work?
Rapid rescoring is something a lender can do for you; it is not something you can do on your own and try to save money. The lender offering the service will require you to provide them with proof of an error on your credit report. This error could be something that was reported incorrectly from the start, such as a collection that should never have been placed on your credit report or an item that you paid off that is not yet reporting as paid in full.
Once the lender not only has possession of the proof, but verifies it themselves, they will submit the proof to the credit bureau. The bureau then adds the information to your file. After a few days of the information residing in your file, the lender will request an updated credit score. This can be very beneficial if you were on the cuff between two interest rates on your mortgage as even 0.5% can make a huge difference in your payment.
Rapid Rescoring Is Not Credit Repair
Rapid rescoring is not synonymous with credit repair. You cannot erase mistakes you really made in your credit history, such as a late mortgage payment or a collection that is legitimate. It is strictly to help update your credit score with the most current positive information that otherwise might take a few months to reflect in your credit score.
It Might Hurt Your Credit Score
Some borrowers do not realize the negative impact that rapid rescoring might have on their ability to get approved for a loan, namely a mortgage. The act of updating your current debts can be beneficial, especially if you recently paid off a large debt, but if you have other negative credit reporting that is waiting in the lurks to get reported, it could pop up with the updated score. In this case, it could either wash out the benefits of the rapid rescore or even bring your score down lower than it was before.
Your Lender Knows Best
If you are perfectly honest with your mortgage lender, he will be able to tell you how rapid rescore would affect you. If you tell him there is a late credit card payment not yet reporting, yet you paid off your car loan in full, he can look at the entire picture to tell you how he thinks your score would be affected. Due to the fact rapid rescoring is a fee-based service, you will want to think long and hard about its benefits and drawbacks to ensure that you have the best outcome.
Typically, your best bet is to make your payments on time, pay your balances down, and get any delinquent accounts brought current in order to have the best chance at a decent credit score. If there is a large discrepancy on your credit report that truly is harming your score, your lender will counsel you on the benefits of rapid rescore. It is not a quick fix or a way to hide mistakes you made in in the past; it strictly is a way to have the most accurate snapshot of your credit history as of today even if the credit bureaus are slightly behind on your credit reporting.