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Michaela Phillips, Guaranteed Rate, Inc.

Michaela Phillips, Guaranteed Rate, Inc.

When applying for a home loan, lenders consider your credit score above all else. If your credit is low, lenders may affix higher interest rates to your loan, reflecting a higher monthly mortgage rate. Good credit helps potential home buyers secure loans with low interest rates, meaning they can maximize their monthly mortgage budget to get the home they want.

What is a rapid credit rescore?

A rapid credit rescore is provided through a process by which the lending company submits proof to a credit reporting agency of recent updates to your credit account that may not yet be reflected on your official credit report. A rapid rescore can only be offered through your lender; home loan applicants cannot apply for one on their own.

Prior to requesting a rapid rescore, a lender is able to run a credit score analysis that will show the impact of a rapid rescore. The analysis also provides an actual dollar amount that the borrower would need to pay toward debt in order to impact their credit score via this method. The percentage of maximum revolving debt vs. maximum allowed debt directly impacts credit scores.

In some cases, reducing the balance on one card by a small amount can dramatically improve a credit score. If the potential borrower has recent late payments reported, the lender can determine if removing these late payments will improve the borrower’s credit score. While it isn’t an easy feat getting the creditor to remove a late payment, if it is a creditor error, they usually will.

Who needs a rapid credit rescore?

If you’re applying for a home loan and fall a few points short of approval, your lender may suggest a rapid credit rescore. The lender may also recommend a rapid credit rescore if they think you can qualify for a better rate. Be sure that you are aware of the lender’s credit score qualifications, and request that they supply a rapid rescore if you’re close to the required number.

What doesn’t a rapid rescore do?

A rapid rescore doesn’t alter your overall credit history, but it can dramatically increase your score. The purpose of a rapid credit rescore is to quickly refresh your credit report to show the most updated data. If you previously defaulted on a loan, the rapid rescore will not momentarily boost your credit score to get you approved, it will just reiterate your actual, updated credit information to the lender.

How much does a rapid rescore cost?

According to the Fair Credit Reporting Act, it is against federal law to charge the potential borrower for a rapid rescore. If you find yourself in a situation where a lender is tacking on an additional fee for a rapid rescore, you may want to consider finding a more trustworthy lender.

How long does a rapid credit rescore take?

On average, it takes five business days for a rapid rescore to return to the lender. The length of time may vary, however, if the borrower does not provide all information accurately the first time.

Partnering with a knowledgeable and experienced lender who knows when and how to request a rescore could save you thousands on your mortgage.

By Michaela Phillips. Michaela is the Vice President of Mortgage Lending at Guaranteed Rate, Inc. Contact Michaela at 303.579.5517, e-mail michaela@michaelaphillips.com or visit michaelaphillips.com. NMLS: 312874.