Picture this scenario. You apply for a home loan and your mortgage broker or lender says that you might be able to qualify for a lower interest rate if you could improve your credit score by a few points.
The problem, however, is that even if you manage to reduce your loan balance, it can take anywhere from 30 to 60 days for the updated information to appear on your credit report which is not as long as the NFL thinks of ways every year to help the Patriots win but this is another topic. Unfortunately, you cannot afford to wait that long, since mortgages are time-sensitive.
How to update credit report quickly in such a scenario? This is precisely where a rapid rescore can help you.
What is a Rapid Rescore?
It is a process wherein you can get your credit report updated quickly through your lender. Rather than waiting for the credit bureaus to update your report on their own – which can take anywhere from 30 to 45 days – you can submit the updated information to your lender, who can then submit it to the bureau and get your report updated immediately.
How Does Rapid Rescoring Work?
It is a two-step process.
The First Step
You need to inform your lender of the changes to your credit history that are not reflected in your credit report yet, provide proof for the same, and place a request for a rapid rescoring.
For instance, if there is an erroneous entry in your credit report which states that you defaulted on a loan, when you actually did not, you can bring it to the attention of your lender and get it removed immediately.
Similarly, if you recently paid off a personal loan or a portion of your credit card balance to bring down your debt-to-income ratio, you can request your lender for a rapid credit rescore.
The Second Step
Once you provide your lender with all the information they need, they will contact the credit bureau, provide them with the updated information, pay a fee, and get your credit report updated.
Can an Individual Place a Request for Rapid Rescoring with a Credit Bureau?
Rapid rescoring is essentially a service provided by lenders. Individuals cannot approach credit bureaus by themselves and place a request for a rescoring. So, you can only get it done through your lender.
How Long Does the Rescoring Process Take?
It usually takes anywhere from two to five days. In some cases, it might take up to a week.
What Does Rapid Rescoring Cost?
It does not cost you any money, as the service is offered completely free of cost. Your lender, however, has to pay a fee – anywhere from $25 to $50 – in order to get your credit report updated. They cannot pass on the costs to you, as they are prohibited by federal law from doing so.
The Fair Credit Reporting Act, which was passed in 1970, clearly states that an individual cannot be charged for disputing wrongful information on their credit report. Since rapid rescoring is essentially an ‘expedited dispute process’, the lender cannot charge you any money for it.
What Are the Benefits and Limitations of a Rapid Credit Rescore?
Rapid rescoring can help you update your credit report in very short period of time, improve your credit score, and help you qualify for lower interest rates.
Let us assume that you apply for a mortgage and the lender tells you that if you can raise your credit score by 20 points, you can pay a smaller down payment and qualify for a lower interest rate. In such a scenario, you can pay off a loan or reduce your credit card balance, submit the updated information to your lender, get a new and improved credit score, and qualify for a lower interest rate.
Let us assume that you are planning to apply for a mortgage, but there is an error in your credit report. It is reported that you failed to repay a loan, even though you paid it off a couple of weeks ago.
Again, in this scenario, you can contact your lender, provide them with the relevant documents, and request to have your credit report updated. Within a few days, you can get a new and improved credit score and apply for a mortgage.
In these types of cases, the expedited rescoring process works to your advantage, as you can raise your credit score by a few points within days and qualify for a low-interest rate loan. It is simply not possible under normal circumstances, as it can take as long as two months to get your credit report updated.
A rapid rescore can only expedite the process of updating your credit report. It does not make any difference to your actual credit score.
Let us assume that you can increase your score by 20 points by paying off one of your credit card accounts. Under normal circumstances, it can take up to 60 days for your credit score to be updated. If you request for a rapid credit rescore, you can get it updated within two or three days.
In both cases, your credit score only increases only by 20 points. The only difference is the time it takes to get it done.
Can a Rapid Credit Rescore Repair Your Credit?
No, it cannot. It is important to understand that rapid rescore is not the same as credit repair. It can only update your credit report. It cannot remove any negative information from your credit report.
For example, if you pay off a delinquent account, you can get it updated quickly through by requesting for a rapid rescore. You cannot, however, get it removed. It will stay on your records for seven years, like it normally does.
Alternatives to Improve Your Credit Score
If you have a poor credit score, there are a number of steps you can take to improve it.
- Negotiate with your lenders to get your interest rates reduced.
- Pay off your debts – credit cards in particular – aggressively. Make sure your debt-to-income ratio (your monthly debt repayments divided by your monthly income) does not exceed 36%.
- Pay all your bills – irrespective of the amount – on time. The very fact that you are late on your payments can hurt your credit score, irrespective of how much you owe.
Most importantly, make it a habit to check your credit report on a regular basis and fix the errors (if there are any) immediately. If you keep tabs your credit reports, there is no need to worry about fixing anything in the last minute.