Dallas Fort Worth Area Homes and Real Estate

If you need to raise your credit score to qualify for a mortgage (or qualify for a better rate), ask your mortgage professional if they offer the rapid rescore service.  Rapid rescore is a tool offered by some mortgage companies that allows newly documented and vertified information to be reported and updated to the databases of all three credit reporting agencies in three to five business days.  Depending on the information, this can potentially result in a dramatic improvement in your credit score. 

We have used the rapid rescore system with much success over the last several years.  The process enables us to report and update information to the credit bureaus quicker than most creditors.  The reason for this is that most creditors don't have a direct, real-time connection to the credit bureaus to update information.  Most creditors only download information to the bureaus once a month or every couple of weeks at most.  So if they change information on your account, it still may take up to 30-60 days to reflect on your credit report and update your score.  If you're in the middle of buying a house or plan to close in the near future, that 30-60 day time period may mean the difference between closing and getting the rate that you want versus having to rent, sign a lease and waiting 6-12 months to qualify again.  You should never persue a contract on a home without knowing for sure if you qualify for a loan by having a mortgage professional do a thorough pre-approval. 

WHEN IS A RAPID RESCORE THE RIGHT SOLUTION TO RAISE A LOW CREDIT SCORE?

Rapid rescores are typically used by mortgage lenders to improve the credit scores of their clients for three reasons:

1. To qualify them for a better interest rate or loan program.  Fannie Mae and Freddie Mac have substantial interest rate adjustments for lower credit scores, and many other lenders have arbitrary rate adjustments as well. 
2. To qualify them for a loan program that requires a minimum credit score. 
3. To obtain an automated underwriting approval.  Some loans and loan scenarios require approval through an automated underwriting system.  Although raising the score can certainly have a positive impact on automated underwriting recommendations, there's no way to know for sure without re-running the program after the rescoring process is complete. 

Since the rapid rescoring process is quite expensive (can cost up to $75 PER TRADELINE in some instances), it's typically not used unless it's absolutely necessary. 

New technology and tools, such as Credit Analyzer and the Credit "What-If" simulator can give mortgage lenders a very close estimate of the potential score results from a rapid rescore.  The service is great, but it doesn't work 100% of the time.  For this reason, buyers should seriously consider delaying the process of submitting an offer on a home until the process is complete and the lender has repulled credit and verified the new score is good enough to qualify for the loan or obtain the desired interest rate. 

The credit bureaus also have very strict documentation requirements for rapid rescores.  Also, the information must be verified with the creditor, which can sometimes cause delays. 

WHAT TYPES OF ITEMS CAN BE RESCORED?

There are many different items that can be rescored using the rapid rescore service, but they all require very specific documentation.  Here are the most common types of credit items that can be rescored, as well as the documentation that's usually required:

• Removing late payments that were reported in error by a creditor.  This requires a letter from the creditor that specifically states the late payments in question were a mistake.
• Change in the balance of an account, especially a revolving account, such as a credit card.  Since 30% of your credit score is determined by account balances, paying down accounts can have a dramatic positive effect on credit scores.
• Paying off a collection, judgment or tax lien.  Documentation from the creditor, or a release of lien or judgment is required.
• Updating the status of accounts included in a bankruptcy.  This requires submission of the bankruptcy petition and discharge, and all accounts in question must be listed in the petition, along with their respective account numbers. 
• Release of liability from an account.   

 WHAT TYPES OF DOCUMENTATION ARE ACCEPTABLE FOR A RAPID RESCORE?  WHAT TYPES ARE NOT?

The rapid rescoring process requires very strict documentation in order to be accepted by the credit bureaus.  Typically, these are the requirements:

• A letter, on letterhead, from the creditor stating which specific information about the account (such as the balance, status, date of late payments, etc.) is to be corrected.  Simply making broad statements, such as "The information you inquired about", or "We have updated our account records with new information" is not acceptable. 
• The letter must typically have a signature and/or at least the name and number of the person or department from where the letter originated. 
• The letter must be legible.  Be careful when faxing as fax machines often degrade the quality.  Consider scanning and emailing to ensure quality.
• Account statements are acceptable for balance updates, but must show the account holders name, the full account number and an accurate balance.  IF the balance changes in between the time the statement is received and it is verified by the credit bureau, the reported balance may change as well.

Information and documentation that's generally NOT acceptable includes:

• Written letters of dispute.  Disputes must be filed directly with the credit bureaus and go through the normal process.
• Paid receipts from third party payment processing agencies, such as Western Union, that did not come directly from the creditor.  If you are paying off a collection, always demand they send a letter stating the account is paid in full. 
• Cancelled checks for payments. 
• Letters that are missing important and required information, especially account numbers and the specific information that is to be updated, such as the removal of a late payment or change in balance.

Rapid rescores have saved many loans that would not have otherwise closed had this service not been available.  Again, the process is very expensive and the documentation requirements are very strict, so it's never a good reason to put off dealing with issues ahead of time that may cause problems in the middle of the loan process.  You should start the pre-approval process at least two months before you plan to begin looking for homes, EVEN IF you think your credit is perfect.  Errors and mistakes on credit reports are all-too common, and they are one of the main reasons why buyers don't close on time.