Every year thousands of would-be homeowners face a frustrating fact: Their credit scores are not quite good enough to get the loan they want. If you’re a little short when applying for a loan, a rapid rescore could get you where you need to be.
A rapid rescore is a way for loan companies to request an immediate credit score recalculation to take more recent, but unaccounted for, good credit behavior into consideration. If you can solve some credit problems and your new score could help you get a better deal, consider a rapid rescore.
What Is a Rapid Rescore?
When you try to get a loan for something like a car or a home, your credit score is an integral part of how lenders structure your loan and calculate things like interest rates.
Unfortunately, some positive credit behaviors, which can have a big effect on your credit score and loan terms, don’t always immediately show on your credit report. Actions like lowering your credit utilization or catching up on any late payments may not show up on your credit reports for 30-60 days.
That’s where a rapid rescore comes in. If your score falls close to a range where the lender can offer better terms or interest rates, the lender can request a rapid rescore from a credit reporting agency that immediately updates your report and score to include recent credit activity.
Rapid rescoring isn’t generally available to consumers. Only certain lenders can request one, and they require specific documentation that would justify the rescore.
A rapid rescore may help if you have, or can, make immediate changes that could positively impact your score and improve the terms of a loan you are applying for. You and your lender will have to decide whether a rapid rescore is likely to help you.
Not all lenders offer rapid rescore. If you believe a rapid rescore will help you get a loan or get better terms, ask your lender if they offer this service and if they think it will help you.
When Should I Consider A Rapid Rescore?
You might consider a rapid rescore if you meet these conditions:
- You are applying for a large long-term loan. In fact, most rapid rescores involve mortgages.
- You need to close a deal fast.
- You can make immediate changes that will affect your credit, such as paying off a loan balance or settling a collection account.
- A small change in your score will make a difference in your loan terms or eligibility.
For example, if your credit score is at a level where it would be considered “Good” or above, you may be eligible for a lower down payment or interest rate. If your score is just below this level, gaining a few points could get you better terms and save you tens of thousands of dollars over the life of your mortgage.
If your credit score is close to a level that could get your loan approved or get you a better deal, a rapid rescore may help.
How to Maximize a Rapid Rescore When You Need It?
A rapid rescore can only help if there are problems on your credit report that you can solve.
Get your credit reports and look for specific items that could drag your credit health down. Assess each one and decide whether you can do something about it right now.
Paying off delinquent accounts may improve your credit. You’ll need cash to make the payments, so you’ll have to decide what you can afford.
Moving a balance to an account with a higher limit could improve your credit utilization rate. If you have a $900 balance on an account with a $1000.00 limit, your credit usage is at 90%. The same balance on an account with a $10,000.00 limit drops your usage to 9%.
Make a note of each item on your credit report that you think you can change and have a discussion with your lender to create a rapid rescore plan of action.
How To Get A Rapid Rescore
Show your lender your credit reports and the items that you have identified. Explain what you can do (or what you’ve already done) that might positively impact your credit. Your lender may use a simulation program to predict how much a rapid rescore can help you, if at all. If your lender agrees that a rapid rescore could help you get a better deal, you’re ready to proceed.
Check your recent financial records. Make sure there are no new negative issues that could damage your credit. You will need to make any necessary payments before the rapid rescore begins.
Your lender will engage a rescoring provider. The provider will document each error, payment, or other change in your credit status and resolve these issues with the credit reporting companies. You should have your new credit score within a week.
Will a Rapid Rescore Help Me?
A rapid rescore is not a way to improve your credit on its own. It’s a tool that may help some borrowers get a loan approved or get better terms on a loan.
A rapid rescore gives you an immediate update of your credit report. If you can resolve errors or issues in your credit report, a rapid rescore could provide the credit score you need. If a small increase in your score could get your loan approved or improve your terms, a rapid rescore might help.
Discuss your credit report with your lender and decide whether a rapid rescore could help you.
A rapid rescore is not a substitute for good financial planning and habits. Get your credit reports regularly and evaluate your own expenses and bills to determine the right habits for yourself and your situation.