Benefits and Pitfalls of Rapid Rescoring

Ah, the good old days – and by “good old days”, we’re referring to the not so distant past when a credit score in the mid 500s qualified a potential homeowner for a mortgage. Those lax guidelines meant millions bought homes in the mid-2000s. These days, though, things are back to perhaps the way they should have been all along. Qualifying for a mortgage in these tough economic times is becoming increasingly difficult. First, we have nation of bankers and mortgage brokers who are doing their level best to ensure they don’t make bad loans. The odds of their having to eat those noncollectable balances are steep and no bank wants that, so lenders are honing in on the details and as a result, they’re not considering approving anyone with a score less than, say, 680 or sometimes even 700. Not only that, but days of the 100% LTV are over, too. Most, if not all, offers require hefty downpayments, too. But what happens when you know your scores should be strong enough and you have your down payment but your declined? Could it be a mistake on your credit report that disqualified you? There’s one service that has managed to survive the big changes in the mortgage industry. That service is known as rapid rescoring.

Loan officers take the applicant’s information, runs and then prints out the credit history and lets the applicant know if he’s qualified or not. For those who are sure their scores should be higher, the loan officer will sit down with that applicant go through his credit history. A good number of those applicants are right – their scores should be higher. After all, we all know the information on many credit histories in this country is inaccurate. Sometimes, a judgment shows up that the applicant has no idea where it came from or a credit card account that was closed five years ago is still showing as open and worse, with a balance. This is where the loan officer can save the deal.

The applicant, of course, can contact creditors and the bureaus to dispute and remove those errors. Unfortunately, that usually takes months to complete and in the meantime, that dream house was purchased by someone else who thought it was their dream house, as well. Rapid rescoring is often the best alternative.

What it’s Not

Before we go into what this service is and what it can do, you should understand what it’s not. First thing you should know is this isn’t a service available for consumers to purchase on their own. Only lenders and brokers can put these wheels into motion. There are specific limitations, as well. If you’ve been declined for a credit card or any other type of personal loan, rapid rescoring isn’t a service that’s going to be made available; it’s reserved mostly for mortgage applicants. It can be expensive, too. In fact, on average, this will cost an applicant around $50 for each error (and each bureau) he wishes to clear up on his report. Plus, if the original creditor does not participate, it won’t work. In other words, the service will contact that creditor and if the creditor refuses to research it from their end or if that creditor has been sold or no longer has access to the original record, you might find yourself against the wall. You won’t likely get a refund and you won’t see that error removed from your report. You should also know there are no guarantees that this can work, either. Even if the errors are removed and your scores are recalculated (which is part of the service), you may discover it still isn’t enough of an improvement to get you qualified.

Typically, what you’re going to want to have removed are judgments, foreclosures, bankruptcies and other “big” errors. You can request a late payment be removed from your Visa account, but again, there are no guarantees the card network will meet your halfway with that.

Still, if it works, you can see up to a 50, 75 or even 100 point jump, depending on the circumstances and your current credit history. This is also a fine route to take if you’ve been a victim of identity theft. Keep in mind – you’ll want to bring all of that documentation to your loan officer as he prepares to submit your file for rapid rescoring.

Advantages of Rapid Rescoring

This, as mentioned, is a better and faster alternative to you doing it yourself. Usually, when using a rapid rescoring service, you can have it wrapped up within a week’s time. This kind of service has the potential to not only qualify you for a an approval for a mortgage, but if your scores jump significantly, you might find yourself being offered a much better interest rate. Even if all of the information is correct, but just not current, rapid rescoring can push through that final payment on your automobile that frees up your available credit approval lines. It can also erase any type of fraudulent information, too.

Remember, this option isn’t even on the table unless you’re trying to get approved for a mortgage or a refinance. Not only that, but if the information is correct, nothing will change – except for the fact that you’ve just shelled out a hefty fee for a service you know isn’t going to be much help. If there’s a delinquent account that you actually owe, you’re better off using that money to pay the debt off instead of paying for a rapid rescore service.

If you can remember that there are no guarantees, you should be able to approach this with an open mind. Ask your lender if it offers rapid rescoring (not all do) and if so, if your loan officer believes it can be advantageous in your efforts. The fees are more than worth it if at the end you gain that approval for your dream home.

Have you used rapid rescoring in the past? Did it help in your situation? Share your story with us below or join the conversation on Facebook and Twitter. We want to hear from you.

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