When you apply for a loan, a credit card or any other form of
credit, every point in your credit score counts. So, you may
want to consider boosting your credit score before applying
for any type of credit as even a few points added can make a
large difference. With a higher credit score, you can save on
fees, annual percentage rates, higher bonuses, and perks.
There are many things that you can do to improve your credit
score over time, but credit bureaus often do not make the
relevant adjustments for several months. So if you do not have
the time to wait for creditors and credit reporting agencies to
update your scores, especially if your credit score is just
below the range to qualify for a large loan like a mortgage you
can consider rapid rescoring.
What is Rapid Rescoring?
Rapid rescoring is a service offered by some lenders,
including banks and credit unions to make updates to your
credit reports. The goal is to improve and update the
information in your credit reports considerably quicker than if
you were to work directly with the credit bureaus. Normally it
takes 30-60 days but with rapid rescoring, you can update
your credit within 3-5 days. By reflecting the most recent
positive information your credit score will increase to meet
the time-sensitive aspects of a low-cost loan.
How it can help you?
A rapid rescore is best used when your credit score is within a
few points of qualifying for a large loan, credit card or any
form of credit. It will ensure that your entire credit profile is
completely updated and ready for any loan application
process. Your updated credit score will also result in a
significant difference in the interest rate available to you.
The rapid rescoring process is fairly predictable as lenders
generally use simulator beforehand to see how the update
would affect your credit score. According to Adam Carroll,
Chief Education Officer at National Financial Educators, “A
0.5%-1% difference in interest rate may not seem much when
you are not looking at long term costs. But, every single
percentage that you can decrease means massive amounts in
savings later on.”
For example, say your current credit score will get you a
4.75% interest rate on a typical 30-year fixed-rate loan of
$250,000 and after rapid rescoring, your new credit score
qualifies you a 4.25% rate. Then this can help you save you
$74 a month or $26,737 over the life of your loan. You can
use online calculators to calculate the exact difference in your
When it may not work
A rapid rescore does not raise your credit score alone but
rather updates your current credit profile. So, it will not work
if have recently missed a credit card payment, closed out a
line of credit, had a raise in hard inquiries, or any other form
of negative entry.
Rapid rescoring will also not work if the reporting creditor
does not acknowledge the item in question is a mistake. For
example, if you dispute a late payment and the creditor has no
record of timely payment or you cannot prove it then the
lender will not even attempt a rapid rescore.
It isn’t Magic
To succeed with rapid rescoring you need to participate in the
process. For example, if you are late on payments you will
have to pay up and get it to your lender before you order an
updated credit score. Likewise, you would also collect the
documentation to prove that the accounts were paid up. This
takes time and effort and you cannot depend on your lender to
do all the work.
Are there fees involved?
Rapid rescoring is a service provided by your lender or
mortgage broker and typically you do not have to pay a
separate fee for the service under the federal law (FCRA).
But nothing comes for free, so sometimes there may be a
small fee involved in using the service or even if they do not
charge you will be paying for your lender’s capabilities in the
interest rate and closing costs that you pay. However, in the
long run, this service can save you much more money than
what you pay.
Would it not be better to have one less thing to worry about
when you are in the middle of a stressful and complicated
transaction? Rapid rescoring does help fix inaccuracies
quickly. But ideally, if you check your credit reports
regularly, fix errors and keep your credit card balances low
you will have nothing to fix the next time you apply for a live